Radical cost-cutting measures to achieve this: William Amelio

M. Ramesh

Lenovo has taken a leaf out of the automotive sector and is trying to use `airbags' to protect a falling laptop

Recently in Singapore

Lenovo, personal computer and notebook manufacturer, is "not very far" from introducing its $100 PC, the company's President and CEO, Mr William Amelio, said. Speaking at the `Global Entrepolis @ Singapore, 2006', a business networking conference organised by the Singapore Economic Development Board, Mr Amelio said that Lenovo would achieve this by undertaking radical cost-cutting measures.

Mr Amelio said that it was possible to cut down the cost of PCs by half by offering customers basic machines, to which they could add on features as and when required. Also, Lenovo was telling its customers not to `spec in' upgradability, because "once you do that the machines become big". He also said that Lenovo was always cutting down inventory by outsourcing components to `tier-2' suppliers.

`Transaction model'

Another method would be transaction model of marketing, which refers to selling computers through channels such as online and retail outlets, as opposed to the `relationship model', where a Lenovo representative would build relationship with corporate customers for bulk sales.

`Relationship model' used to prevail in IBM, before the Chinese company Lenovo took over the PC business from it. The Chinese specialised in the transaction model, which has since been introduced in markets like India.

Mr Amelio said that Lenovo now intended to focus on the US market for sales, where it would adopt the transaction model. He said that even on technologically sophisticated products, such as Thinkpad, innovations were possible. He mentioned that Lenovo was researching into technologies for `removing pain points'.

For example, how to ensure that the critical parts of a laptop do not break or lose all the data, if accidentally dropped or if some coffee or water spills on it? Looking into this, Lenovo has taken a leaf out of the automotive sector and is trying to use `airbags' to protect a falling laptop.

Thus on one hand, Lenovo will introduce a cheap, affordable PC and on the other, its products will have protective features.

(This article was published in the Business Line print edition dated November 7, 2006)
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