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Lenovo faces quality, supply problems, report says

Consolidating the takeover
Fri Aug 19 2005, 20:30
A MARKET ANALYST said that Lenovo, which now owns IBM's PC business, faces "challenges" in product quality while it needs also to capitalise on cutting manufacturing costs and the price of components.

Matthew Wilkins, senior analyst at iSuppli's market intelligence group, described Lenovo's manufacturing system as "inordinately complex". Lenovo and the ex-PC division of IBM has, he said, much of its production outsourced to a "bevy" of third party suppliers in different places worldwide. Lenovo, he said, must rationalise this chain, but is aware of that challenge.

However, said Wilkins, Lenovo faces problems with its product quality. Isuppli, he said, "has heard frequent reports about the difference in quality between IBM PCs and Lenovo PCs". He claims IBM used quality products from established tier one mobo suppliers, but "this differs from Lenovo's historical approach of using less expensive products from tier two suppliers".

Lenovo also ought to be able to capitalise on the price it pays for microprocessors. Wilkins said that IBM had received less favourable terms for CPUs and chipsets from Intel compared to other major PC OEMs because Big Blue still stubbornly makes its own competing microprocessors.

Lenovo ought to be able to grab a one per cent discount in CPUs and chipsets from Intel, because of its disconnection from IBM, and because it can buy a lot more chips. The market research firm, iSuppli produced the ranking of the top five OEMs in Q2 this year, with numbers ranked by thousands of units shipped. The white box folk (others) don't seem to be doing too well. µ

Q2 05 rank
Vendor
02 05 Units
02 05 Share
YoY growth
1
Dell
8,974
18%
24%
2
HP
7,120
14.2%
15.8%
3
Lenovo
3,613
7.2%
270.6%
4
Acer
2,050
4.1%
59%
5
Fujitsu-S
1,798
3.6%
16.9%
Others
26,421
52.9%
-5.4%
Totals
49,976
100%
10.8%

 

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