MARKETING PLAN OF IBM LAPTOPS_ THINKPAD SERIES by malj

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									MARKETING PLAN OF IBM LAPTOPS: THINKPAD SERIES

1. EXECUTIVE SUMMARY
   Every product level must develop a marketing plan for achieving its goals. As one
   of the most important outputs of the marketing process; both of us have
   prepeared this customer-oriented and competitor-oriented marketing plan for
   IBM THINKPAD SERIES. If we explain objectives of the plan:
             Whether to determine our brand awareness within the target market
              can meet our financial and non-financial budgets.
             Are our     current customers satisfied with their products or what is
              customer needs that seperate us from the our competitors?
             What features do our macro and micro environment include? so on,
              what is our strengthnesses against our weaknesses?
             How can we capture our entire segment             by drawing an action
              strategy?
Although IBM is not the inventor of the laptop; it has added many things to
development process of the notebook market by it’s revolutionary innovations. From
little light to touch pointer and lastly fingerprint reader, IBM introduced laptop market
many renewals.


Our team has constituted a survey questionning participants’ priorities as purchasing
a laptop and their thoughts about major computer producers. At the result of the
customer value analysis we have established an explanation describing customers’
first element was processing speed ( for detailed info look into: analysis of the
survey). We think, that tells us clearly why almost all brands emphasize processing
speed in their commercials.


In addition, we have discovered that although IBM was the firm that present the
most innovatist products to marketplace, consumers tend to under evaluate IBM
brand against some other brands. ( details: analysis of the survey ) That challenge
may be the most time consuming relative to other questions. Lastly, we have came
into agreement that maybe it was the result of the segmentation process which
targeting business and do not care consumer side relatively; therefore consumer side
have dominant factors since we surveyed on students. Moreover, the design of the


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notebooks are simple, mostly black and only in the middle of the keyboard there is
red pointer; so it can cause under-posititioning in the consumer mind. However, we
belive that IBM thinkpad is the most useful, efficient and characteristic laptop line
against the its competitors’ simple computers.
In conclusion, Lenovo’s strategy entering also consumer segment is gaining more
importance when we think opinions above, and it seems right strategy to focus on
these points.




TABLE OF CONTENTS


Executive Summary……………………………………………………………………………….1
Introduction………………………………………………………………………………………...3
IBM & LENOVO……………………………………………………………………………………...3
Markeing Mix……………………………………………………………………………………….4
Current Market Analysis…………………………………………………………………………..8
Marketing Environment…………………………………………………………………………..10
SWOT Analysis……………………………………………………………………………………...12
Marketing Strategy………………………………………………………………………………..14
Analysis of the Survey Results of the Competitors’ & Customers’ values,Positioning…15
Recommendations………………………………………………………………………………...18




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2. INTRODUCTION
Notebook PCs can go anywhere and handle almost anaything that a traditional
desktop PC can, including multimedia applications. Notebooks can be as powerful
as desktop and they offer users the freedom to roam. With increasingly low
weights, longer battery life, and the addition of the integrated wireless, today’s
notebooks are taking mobile computing to a new level.


Of course there are many people who continues to use PCs. Who uses PCs?
Gamers, professionals, and heavy-duty engineering types may want to stick with
desktops.


IBM was not the founder of the laptop market but did so much to improve the
market. IBM’ biggest strength was to be innovative. With IBM’s latest technology
of ThinkPad Series and ThinkCentres, incorporating ThinkVantage Technologies,
we can conclude that IBM is focused on bringing innovation to the PC and
notebook markets. However, in the mid of 2004, there were rumours that IBM
will be selling its PC business.


2.1. IBM & LENOVO
In December 2004, IBM sold its Personal
Computing    (PC)    division   including   the
IBM’s “Think” brand notebook to Lenovo
Group, China’s biggest computer maker,
for $1.75 billion in cash and stock. This
deal also gives Lenovo the right to use the
IBM name for 5 years. Lenovo PCs and
laptops will continue to bear the IBM
ThinkCentre and ThinkPad logos in addition to the Lenovo brand. In fact, for the
first 18 months, Lenovo will use the IBM name and after that they will use the
both names. Here we can conclude that Lenovo certainly wants to benefit from
the great brand awareness of IBM, however the experts are doubtful about it and
they state that Lenovo will never be able to be have a brand image as popular
and strong as IBM.




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The transaction created the world’s third largest PC business with approximately
$12 billion annual revenue. IBM would hold an 18.9% stake in Lenovo.


One of the possible reasons for the IBM and Lenovo’s commitment lays in the
market’s maturity and that both Dell and Hewlett-Packard have managed to
seize much of the business PC market. With the Lenovo deal IBM will be able to
eliminate the expense of making PCs and concentrate more on its highly
profitable services business. Lenovo provides IBM with a reliable supplier that
can bring IBM-branded computers back into the consumer market.


IBM’s prospects for laptop deals would consider switching to Dell or HP. There is
now the big attention of the competitors and also of the customers after the
acqusition. Dell Chairman concluded on the acquisition like that: “In the last few
years, there has been a continuing trend, not only a decline in markets, but a
de-emphasis and divesting of assets in the small computer business at IBM. It’s
clear that this is not a long term strategic priority for them.” The competitors’
and customers’ situation will be examined in detail in the following sections.


3. MARKETING MIX:
3.1 PRODUCTS: PRODUCT LINE: LAPTOPS - IBM THIKPAD SERIES
IBM has a large product and services mix including laptops, desktops, business
consulting, IT services, software products, servers, storage and other hardware
products. Laptops are one of the product lines of IBM which it sold to Chinese
Lenovo this month(May 2005). However in this study we will continue to consider
the product line as IBM Thinkpad Series. Before considering the elements of the
product line, we will shortly describe the notebook and laptop types.
Notebook&Laptop Types:
Notebook    manufacturers    offer   systems   in   3   main   categories:   desktop
replacement, mainstream and ultraportable. A few smaller categories exist, too.
Desktop replacements are the heavyweights among notebooks which you prefer
instead of the traditional desktop PCs. Mainstream notebooks are typically owned
by business users who travel frequently and also for college students. These type
of notebooks are gaining popularity because of its well-balanced blend of
portability and power. Finally ultraportables are the sleekest, slimmest full-




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featured notebooks on the market. They tend to be expensive and are primarily
intended for high-level business executives who travel frequently.
The Think Strategy of IBM:
THINK PRODUCTS                            In offering a product line, companies
ThinkPad         laptops                  normally develop a basic platform and
ThinkCentre      PCs
                                          modules that can be added to meet
ThinkVision      Monitor
ThinkAccessories Accessories              different customers requirements. IBM
                 Services
                                          also had a strategy of simplificating its
ThinkServices    Package
                                          product line.   The idea was to bring all
IBM’s   personal   computing   products   like   desktops,   notebooks,   monitors,
accessories and services under one brand, called “Think”. It would provide them
the advantage of using fewer resources fo deploy, manage and support PCs. IBM
laptops and notebooks come in a variety of styles and models. The different lines
of notebook and laptops include the G Series, the R
                                                 BEST OF THINKPADS
Series, the T Series, and the X Series.          lighest            X
                                                 strongest      and
IBM ThinkPad G Series: The G Series offers a
                                                 fastest            T
powerful desktop replacement solution that gives most economic      R
users the performance with an affordable price. smallest and fast   G

The G Series offers large, bright displays and has unique comfort features,
like its pivoting screen, to make the mobile computing as efficient as possible.
Designed for the user who requires a full-featured machine with occasional
mobility, they are ideally suited for small- to medium-sized businesses,
schools and universities, and government agencies. The ThinkPad G series
doesn’t sacrifice the features desktop users require.

IBM ThinkPad R Series: Performance features include Intel Pentium M
processors on select models, and a choice of graphics that make viewing
presentations and demanding applications easy and precise. With high-
performance wireless networking and image compatibility for easy rollouts make
these models an all in one solution for on demand organizations. Powerful
computing the accountants will love. This series suits frequently mobile users
who want ready-to-run computing.

IBM ThinkPad T Series: The IBM ThinkPad T Series notebooks are small,
lightweight, and durable. At 1” thin and starting at 4 ½ pounds in travel



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weight, these models are perfect for people on the go. Options for flexibility
include an integrated, easy loading modular bay for fast swapping of IBM
Ultrabay devices. These models, give you the chance to experience wireless
networking.

IBM ThinkPad X Series: The IBM ThinkPad X Series notebooks are the
smallest notebooks available through IBM and some of the lightest in the world.
Starting at 2.7 pounds and featuring an ultra-long-life battery that lasts up to
six hours and a full size keyboard, the X Series is great for small to large
businesses whose people are on the move all the time.

Below    are   the   IBM’s   ThinkVantage      solutions   and   some     other
specifications that make it gain a competitive advantage over its
competitors and so help IBM to clearly differentiate.




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3.2. PRICE
The incoming CEO of Lenovo Group says he will rely on product innovation, not
aggressive pricing, to capture the PC market. This may affect some of the people
who hope the deal will make IBM more price-competitive against Dell and HP.
However, if we compare the options with IBM, we can easily see that you pay less
IBM Thinkpad for more benefit. That’s why, value you get from Thinkpad will be
more, as a result more likely you will purchase it.


3.3. PLACE
IBM mostly reaches its customers through business meetings, seminars, special sales
forces.


3.4. PROMOTION
Since, IBM has served business market segment, their sales can be from the point of
proffessional view. For instance, a consumer buying a laptop for his personal use, he
can choose the one which exceeds his expectations or the money he can afford
only because of laptop’s impression through           the purchasing decision or sales
represantative. Unlike, organisations probably will behave more careful so, purchase
laptops which are best for their members and value costed least to company.
Therefore, company should estimate always basic differences between consumer
segments and business.



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IBM doesn’t heavily make consumer advertisements, as it’s not its target market. You
can see an example of their advertisement, in the appendices part. Below, you can
see the IBM Think Strategy Summarization and some of the awards that IBM won with
this strategy.




4. CURRENT MARKET ANALYSIS
4.1. CURRENT SITUATION: TURKEY & WORLD
      According to IDC, the PC market will grow by 10.1% worldwide in 2005,
       reaching two digit growth rate. However the firm is also predicting the
       commercial PC shipment growth to slow in 2005 and be about 11.3%
       compared to 2004     that was 15.9%. The research also shows that the



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    desktop refresh cycle is shortening to 3 years, while lengthening the




    laptop refresh cycles to 4 or 5 years. So the challenge is getting even
    harder.
   According to the research firm Gartner, Dell led in mobile computer sales
    with about 2.1 million units and 18% share in the third quarter of 2004.
    HP was second with sales of 1.9 million units and 16% share. The sale of
    IBM’s PC business to Lenovo has placed IBM in the third place.
   Customers have become more assertive and they are now demanding
    advanced technology capabilities on their systems to facilitate growth in
    their business.
   There is a higher demand on wireless.
   The notebook and laptop market has clearly become a matured market.
    Dell, HP and IBM offered models with similar designs and mostly identical
    features.
   In the recent years, IBM PC Group has struggled as a low-margin business
    in a high-margin company, starved for funds and unable to take a chance
    on interesting products with no assured market.
   IBM operates since 1938 in Turkey and that’s quite a long time.
   In 2004, there has been an 31% increase in sales of PCs in Turkey
    whereas this number even reaches more tahn 50% in sales of laptops.
    218.000 of the 862.000 computers sold were notebooks&laptops.
   This year National Education Ministry of Turkey had announced that they
    will be selling cheap laptops to the teachers with attracting selling options.
    They estimate that this will even give a big hit to the laptop sales in
    Turkey.




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4.2. MARKETING ENVIRONMENT
4.2.1. Macroenvironment
Demographic Environment:
Demographic     elements       are   the   most   important   elements   of   the
macroenvironment. Population, growth rates, and age mix are included in the
demographic environment. There are many young people in Turkey and the
usage age of the laptops fall everyday so Turkey would be a very good market
for IBM. Also the businessmen now highly prefer using laptops also in Turkey as
they want greater flexibility where they can take their laptops with them.
However as globalization brings greater choice availability and that the
customers have the advantage of using internet to get information, it’s not as
easy as it seems to penetrate the whole market. Rather than mass marketing, I
think IBM should look for micromarkets. The target markets of IBM differ
according to the different customer groups such as the business and on the
other hand the educators ans students. Different marketing programs are
needed for each different target group.
Technological Environment:
Technology is changing and so improving at a growing pace everyday. So in
order to survive in this competitve environment, IBM has to improve itself
everyday. Because an innovation can change everything and help it gain the first
place in the market. If we think that IBM was the company which invented the
computers, we can conclude that this is their corporate strategy.
Political-Legal Environment:
The sale of IBM’s PC business unit to Lenovo is not as simple as it seems. There
are also some political results and maybe the reasons of it. Some people are
questioning the US intellectual assets falling into the hands of China. There
seems to be national tension between the globalization imperatives of big
business, and the security motivations of governments. So I think that US may
not be very happy about this acqusition. But on the other hand, there can also
be some other political explanations which support that this will be in favor of
the US. The Committee on Foreign Investments in the US which is attached to
the Treasury Department, gave the deal the green light after reviewing its
national security implications.
Social-Cultural Environment:




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IBM supports projects and medical seminars and so has long term plans: They
want to combine senses, people and the computers. IBM takes the fruit of these
works. Recently they announced a new laptop specification. They innovated the
finger print reader. Of course IBM makes all of these works for the sake of the
humanity, without damaging the IBM’s corporate image.


4.2.2. Microenvironment
Customers:
Deciding to buy a laptop is not an easy decision for the customers, because the
consumer is highly involved in a purchase but sees little difference in brands.
This is a high involvement decision as the laptops are expensive, bought
infrequently, and risky. Also although there are many different brands in the
laptop market, there are not any significant differences. So we can say that this
is a dissonance-reducing buying behavior of the customers. So the post purchase
behaviour of the customers should also be examined in detail here. The
marketers have to differentiate their prouducts, in other words succeed in being
a “purple cow” in the market. IBM is aware of this and their philisophy is to
“improve and make better” rather than “inventing all the time”. They created
ThinkVantage technologies which state the importance of the customer services
and other improvements.
What do customers expect while considering buying a laptop?
         no defects
         excellent service
         cheap spare parts
         high performance
To       learn more about the customer buying habits about laptops, we made a
“Customers and Competitors Value Analysis Survey” which will be examined in
detail in the following parts.
Competitors:


                                                                      Competition
                                                             between         DELL,
                                                             SONY,     HP,   IBM,
                                                             APPLE,     TOSHIBA




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etc. have characteristics from monolistic competition in which many competitors
are able to differentiate their offers in whole or in part (restaurants, beauty
shops). Competitors focus on market segments where they can meet customer
need in superior way and command a price premium. İf we run an eye over last
news;
       Dell introduced its new Latitude D-Family notebooks.
       IBM’S prospects for laptops deals would consider switching to Dell or HP.
        Loyalty of IBM’s prospects lags behind potential customers of both Dell
        and HP.
Regional brands can be a very big threat to branded products including IBM. One
example is from the Russian RoverBook of Bely Veter          which had comparable
products with the world giants with cheaper prices. However, this local success
story is of course something of a rarirty in this niche information technology
industry.
Resellers&Distributors:
IBM conducted training and certification programs for its channel members. They
also had an initiative called Smart Center which was set up for resellers and their
customers. Now what will be their situation after the acquisition? Distributors are
told that they should expect to see little disruption in their current relationships.




4.2.3. SWOT Analysis
Strengths
       IBM is the company which invented the first computer.
       It has a very big intellectual capital, over 30.000 people work in IBM.
       IBM ThinkVantage techonologies help IBM gain the loyalty of their
        customers by providing them the IT solutions. In other words, IBM sells
        PCs just as PCs, but as technology and business solutions.
       ThinkPad is a very personal product and has the ease of use as its most
        important feature.
       IBM’s biggest advantage is “Innovation”. IBM features several industry-
        leading features such as ThinkLight, Active Protection System, Access
        Connections, etc.
       The biggest strengths of IBM are its leading technology, features, service,
        support and channel reach.


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      Outstanding security, manageability and wireless features are its other
       advantages.
Weaknesses
      In the recent years, IBM PC Group has struggled as a low-margin business
       in a high-margin company, starved for funds and unable to take a chance
       on interesting products with no assured market. In other words, we can
       say that the PC business was a “cash cow” of the IBM portfolio, also close
       to being a “dog” according to the Boston Consulting Groups’s Growth-
       Share Matrix.     The market growth rate is a one digit value and
       optimistically it’s estimated that it may reach the two digit values in 2005,
       so the market growth rate is low. And among IBM’s other product lines,
       the notebooks do not held a very big position, and it had started to lose
       relative market share. At this point the company would have to pump
       money back into it but they prefered another solution rather than this,
       and that is the acquisition.




      IBM is a very big company and has many large businesses inside it. This
       ca lead to a slow down in innovations which has major importance for
       IBM. At this point, the smaller companies can make some other important
       investments. Maybe this is why IBM has sold its PB business.
      The online sales are a good opportunity however they also resulted in a
       reduction of the customer loyalty.
Opportunities


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      There is always demand for the technological products especially for the
       ones who are innovative.
      Change in IBM’s nationality won’t be significant as the computing products
       from Dell, HP and others are also built by Asian contract manufacturers,
       mostly in China. So we can say that Lenovo will maintain the quality that
       ThinkPad customers have come to expect.
      First time buyers are now choosing between desktop PCs and laptops or
       notebooks and every month their numbers are growing.
Threats
      If we look from the Lenovo’s side, it wont be easy to play on a worldwide
       level, as you have to deal with issues of distribution and the supply chain.
      Sony had entered the market producing radios. However now it offers a
       greater variety of tehcnological products such as PDAs, MP3 players and
       notebooks. The segments are integrating and it’s becoming harder to
       compete.
      The competitors              are     increasing   their   power   and   they   also   make
       innovations.
      The cheapest products and local brnads also threat the giant players of
       the market.


5. MARKETING STRATEGY
Marketing     strategy        is    built   on   Segmentation,     Targeting    and   Postioning.
Nowadays, mass-marketing is not useful as it did past. Segmentation gains
importance more and more in marketers plans. Consumers differ greatly in
values they bear on and their needs vary by their satus, lifestyle, geography,
occassion etc. Market segments can be                    built up in many ways from income
customers dispose to personality they carry.


          Laptop market includes high
rivalry and its environment very
dynamic. In a such marketplace,
consumers can easily change their
prefers     with        new        technologies,
products.          To    discover         market




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segments, we must investigate the hierarcy of attributes consumers examine in
choosing a brand.


5.1. ANALYSIS OF THE SURVEY RESULTS OF THE “COMPETITORS &
CUSTOMERS’ VALUES”          STATING THE POSITIONING OF IBM AND THE
OTHER MARKET PLAYERS
      As students studying at an university which supplys its students
with laptops, Melek and me have found worthwhile surveying these
attributes on our friends, so we         prepared a questionnaire (see the
appendices) researching competitors’ brand strenghtnesses, customer
values, brands’ design ratings, IBM and DELL’s service satisfaction.
While interrogating marketing strategy of IBM Thinkpads, we will not
forget to point our survey’s indicators.


      The target market of IBM for laptops is large enterprise, small and
medium businesses, government and also education segment. When you look at
IBM’s PC business, large customers and mid-market customers are really the
core of the customer sets IBM have served. However after the acqusition, some
things will change. Lenovo says that they will absolutely bring a broader portfolio
because whereas IBM targets for large enterprise market, Lenovo does
consumer.




                                                             From   the   view   of
Business segment, similar needs can be categorized into wireless networking,
security, performance, battery life and     weight.   For organizations in which


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computers mainly on tables, performance and price lead firstly.        G series of
Thinkpads designed on     the these light of the    purposes with affordable price
while performing well. While G series places in desktop replacement category
serving especially govermental offices, X series apper in ultraportable category in
which prices are the most expensive ( $ 1299 ) and lightest permitting long
business travels with 6 hours of battery life. The one that must being explained
also is security need. This need is supplyed in special IBM business products with
fingerprint reader and a hardware component protecting data technically.


      Lastly, mainstream category including series of R and T are generally all in
one products which are mobile and light but not so configurated as X series. ( T
series are more powerful than R series, so we can say that T series are more
close to X especially in price they are same. ) Particularly, when we look at
segment universities R series are more suitable for them; because today many
university provide internet services on wireless networking with cost sensitive
decisions; and what a chance R series are the cheapest product ( $ 699 )
providing excellent wirelless connection.


       University gamers also can enjoy wireless networking with       multiplayer
tournaments.   Students can easily transfer their data among laptops and with
powerful display properties they can walk on the board to present their
assignments.


      When we think today’s university freshmens as tomorrows proffessional
managers, this segment can also gain a good loyalty to IBM aiming in the future
with the experience of good service and satisfaction.


      Positioning is the act of designing the company’s offering and image to
occupy a distinctive place in the mind of the target market. The overall goal is to
extend the product’s life and profitability.   As   one of the target markets is
students, IBM’s and its major competitors: DELL, HP, TOSHIBA, SONY, APPLE’s
brand, quality and design have been questioned on the survey that have been
made among 24 students beginning ages from twenty to twenty-six.




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      At the conclusion of the survey, some of the findings were impressive. We
had asked students to evaluate laptop brands in terms of Brand strengthness,
Quality of Laptops and Design of the Laptops. In brand strengthness category,
among the 6 laptop brands, Sony has taken the number one place while Toshiba
has been second, Apple third and IBM & HP have taken the fourth place with
value: 3 (very good). When we saw the industry analyses of serious research
organizations, we have witnessed that truly IBM’s biggest competitor was HP.
That’s why our trust towards our cute survey has rise.n sympathically. Toshiba
has significant brand image in Turkish computer users. Not only because of its
advertisings also since it was a Japanese brand. In Turkish consumers mind
especially in electronics industry people have a strong relation with japanese
products and quality so on brand. Therefore, Turkish people may show nation-
dominant purchase decision while others acting brand-dominant.


      If we look at results of the APPLE, it is not difficult to realize it’s design
rating exceeds it’s brand, explaining APPLE’s positioning strategy emphasizes
that it’s laptop suits for arts, architecture projects.


      Participants of the survey have complained that design of the IBM laptop’s
could be more attractive using methalic colors as some brands did, like Toshiba.
This kind of design sents the user signals whispering the laptop was well-made.


      While in brand strengthness IBM and HP are same, HP had better design
image than IBM in users mind. Whether your product is more different than your
competitors if you cannot occupy enough place according to your product in their
minds you’re underpositioning yourself, like IBM does.


      Sony entering laptop market afterwards, has won significantly good
market share against its competitors with the help of its strong Brand image in
the consumers mind. Sony sells products mostly to consumer segment who
relatively have big wallets and demand all in one, entertainment devices.


      DELL mostly operates in US market, and do not use physical distribution
channels; i.e. stores. DELL sells its computers over the internet, so it successes
to reduce its operational costs, gains cost advantage over its competitors.


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6. RECOMMENDATIONS
Although we have suggested many ideas inside the paper it will be true decision to
add a subtitle also. IBM should continue its innovative spirit while also focusing on
brand strengthness and positioning challenges. Besides, managers of IBM must give
attention to last-consumer segment in the market chain. They, can try to bring
innovative designs to marketplace with itself pratic additions. Both our survey results
and daily interactions about this subject shows that people would like to see some
different type of design in IBM laptops.


As now the business is owned by the Chinese for 5 years, IBM should also be
improving its media channels in order to keep its 3rd place in the market. Because
the customers are hesitating about IBM’s quality, thinking wheter it will change or
not. And as Lenovo values on both business and consumer market, this would be a
wise decision.


Finally, competition is though and IBM’s competitors are looking greedily at the
market to get use of the rumours about Lenovo-IBM, so it’s better if IBM reacts faster.


“Faster” is the keyword in the laptop market...




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