The last couple of years seem to be all about buyouts and mergers, as the smaller phone companies start to falter, it seems the only way to keep them going is being bought by a larger company. Google took over a rather struggling Motorola Mobility, Nokia was sucked up by Microsoft, and BlackBerry is being sliced up like my Mother's BlackBerry pie, and sold off by the piece. HTC seems to be in the same predicament following their recent first quarterly loss in the company's history of over $100 million, and in the last two years they have lost 90-percent of their market value. It seems as though HTC is ripe for the picking – and Lenovo just might be their salvation as they have been in talks with HTC that started back in August.
Lenovo is the largest computer company in the world and produces PCs for business and home use, as well as laptops under the ThinkPad name for business and the IdeaPad for home users. The also sell both Android and Windows tablets, workstations, servers, smartphones, and Smart TVs as well. Their smartphones were only sold in China, but they announced this year they would be bringing their smartphones to the U.S.
In 2005, Lenovo acquired IBM's personal computer business and continued to market the IBM ThinkPad brand for five years, and has since dropped the "IBM" from the name and simply calls them a ThinkPad. Lenovo's Liu Chaunzhi said about IBM's acquisition:
We benefited in three ways from the IBM acquisition. We got the ThinkPad brand, IBM's more advanced PC manufacturing technology and the company's international resources, such as its global sales channels and operation teams. These three elements have shored up our sales revenue in the past several years.
The plan is for Lenovo to takeover HTC much the same way as they did IBM – HTC has always had a good reputation for building a quality product, but never in the organization of securing supply chains, marketing, or maintaining updates on their devices. Lenovo has a terrific managerial staff and distribution chains and money, all the things that HTC is lacking – put them together and we could see a real contender that would add competition to the other Android manufacturers.
As Goldman Sachs points out: "HTC (places) too much emphasis on product superiority, but the details of implementation to be negligent." Including supply chain management, regional channels, delayed reaction against competitors are operating bottlenecks."
Lenovo and HTC may even make the financial analyst happy with this move. How would you feel about a Lenovo run HTC branded phone? No need to worry the quality will go down if Lenovo's ThinkPad is any type of indicator.