Lenovo

• 1. Introduction

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  Lenovo was founded on the 1st of November 1984 in Beijing with just 200,000 yuan and eleven people who had never built a consumer product before. Those eleven engineers all came from the same state-owned research institute. Within two decades, that small group would own the most recognized business laptop brand on earth and hold a position as the world's largest personal computer vendor by unit sales.

  How did a company that initially failed to sell imported televisions and digital watches end up buying IBM's entire PC division? What does it mean that the man who built Lenovo once sat in the back row of an IBM agents meeting, wearing his father's old suit, thinking the idea of buying the company was "unthinkable"? And what happens when a corporation rooted in Chinese state science decides it wants to compete with Samsung and Apple in every market on the planet?

  Those are the questions this documentary will follow.

• 2. The Name and the Number

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  "Lenovo" did not exist until April 2003, when the company publicly announced the new English name with a campaign involving huge billboards and primetime television ads. Before that, it was known as Legend for its first twenty years.

  The new name is a portmanteau: the "Le" is lifted directly from Legend, and "novo" is Latin for "new" in its ablative form. But the Chinese name, Lianxiang, carries its own weight. It means "association" or "associative thinking" and implies creativity. The term has older roots still: in the 1950s, Lianxiang described a layout of Chinese typewriters organized into groups of common words rather than the standard dictionary sequence.

  The decision to abandon Legend as an English brand name came from Yang Yuanqing in 2002. The problem was practical: "Legend" was already in use by so many businesses worldwide that it could not be registered in most jurisdictions outside China. The rebranding cost the company 200 million CNY by the end of 2003. An eight-week television advertising campaign alone accounted for 18 million CNY of that. The billboards carried a slogan that read, "Transcendence depends on how you think."

  That phrase was not just marketing. It pointed toward a corporate identity Lenovo was still assembling in real time.

• 3. Eleven Engineers and a Rice Farm

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  Liu Chuanzhi, the company's founder, was trained as an engineer at a military college and later worked at the Chinese Academy of Sciences. During the Cultural Revolution, he was denounced and sent to the countryside to work as a laborer on a rice farm.

  By 1984, Liu was leading a team of ten engineers, joined by co-founder Danny Lui, into a new venture. The 200,000 yuan start-up capital was approved by a colleague named Zeng Maochao. The company's original name, agreed at the first preparatory meeting on the 17th of October 1984, was the Chinese Academy of Sciences Computer Technology Research Institute New Technology Development Company. That name was not going to survive.

  The early years were not graceful. The group tried importing televisions and failed. It tried marketing a digital watch and failed. It rebuilt itself doing quality checks on computers. Liu received government permission to open a subsidiary in Hong Kong, and moved there in 1987 with five colleagues. To save money, they walked instead of taking public transport. To keep up appearances, they rented hotel rooms just for meetings. Liu's father, already in Hong Kong, helped his son secure loans and provided mentoring.

  In May 1988, Lenovo placed its first recruitment advertisement on the front page of the China Youth News. Five hundred people responded. After written exams and interviews, the company initially had authority to hire 16 people but ended up offering jobs to 58. Among that 1988 cohort was Yang Yuanqing, who would eventually become Lenovo's chairman and CEO.

  Liu later said of Hewlett-Packard: "Our earliest and best teacher was Hewlett-Packard." For more than a decade, Lenovo served as HP's distributor in China.

• 4. The IBM Deal

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  Liu Chuanzhi once recalled attending a meeting of IBM agents early in Lenovo's history. He wore his father's old business suit and sat in the back row. "Even in my dreams," he said, "I never imagined that one day we could buy the IBM PC business. It was unthinkable. Impossible."

  In 2005, Lenovo bought IBM's personal computer division, the unit that had originally created the ThinkPad laptop and the ThinkCentre desktop. The acquisition made Lenovo the third-largest computer maker worldwide by volume at the time. IBM received an 18.9% share of Lenovo as part of the arrangement. IBM later sold its entire stake, with a final divestment completed in 2011.

  The transition was not without friction. Stephen M. Ward Jr., IBM's executive, briefly became Lenovo's CEO after the deal closed. Ward was then succeeded by William Amelio on the 20th of December 2005. Yang Yuanqing, who had stepped back from the CEO role in 2004, returned to it in February 2009.

  By January 2013, shipments of ThinkPad-branded computers had doubled since Lenovo's takeover of the brand. Profit margins on that line were thought to be above 5%. Liu described the deal's benefits plainly in 2012: the ThinkPad brand itself, IBM's more advanced manufacturing technology, and IBM's global sales channels and operation teams were the three gains. IBM continued to play a background role in servicing and repair and is considered an authorized refurbisher of the Think line to this day.

  In 2013, Lenovo became the world's largest personal computer vendor by unit sales for the first time, a position it still held as of 2024.

• 5. Corporate Governance and Mary Ma

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  Mary Ma served as Lenovo's chief financial officer from 1990 to 2007. Under her leadership, Lenovo built a reputation for the best corporate governance among mainland Chinese firms, according to observers at the time.

  The specifics were concrete. Hong Kong-listed companies were only required to issue financial reports twice per year. Lenovo issued quarterly reports instead, following international norms. The company created an audit committee and a compensation committee, both staffed with non-management directors. Leadership ran roadshows twice per year specifically to meet institutional investors.

  In 2002, Ma organized the first-ever investor relations conference held on mainland China. It took place in Beijing and was broadcast on China Central Television. Liu Chuanzhi and Ma co-hosted it, both delivering speeches on corporate governance.

  This transparency had tangible market consequences. In March 2013, Lenovo was added to the Hang Seng Index, replacing a state-owned enterprise on the list of the 50 key companies on the Hong Kong stock exchange. Inclusion in the index widened the pool of investors able to purchase Lenovo's stock, including index funds and pension funds that track the benchmark.

• 6. The Motorola Chapter

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  On the 29th of January 2014, Google announced it would sell Motorola Mobility to Lenovo for US$2.91 billion. The deal included smartphone lines such as the Moto X, Moto G, and the Droid Turbo. Google retained Motorola's Advanced Technologies and Projects unit and kept all but 2,000 of the company's patents, though Lenovo received royalty-free licenses to those retained patents. The acquisition closed on the 30th of October 2014.

  Motorola remained headquartered in Chicago after the deal. Liu Jun, president of Lenovo's mobile device business, became head of the company.

  The combined Lenovo plus Motorola business had held a 7.2% global smartphone market share in 2014. By the third quarter of 2016, that figure had fallen to 3.9%. Multiple factors were identified: heavy reliance on carriers to sell phones, a lack of distinctive branding, a saturated Chinese market, and a cultural mismatch between Lenovo's hierarchical PC-company structure and the faster-moving smartphone business.

  In August 2015, Lenovo announced it would lay off 3,200 employees, most of them in the Motorola smartphone division. The branding question then became tangled. In November 2015, management said Motorola would be used for all smartphones. Then in January 2016, Lenovo announced it would eliminate the Motorola brand in favor of "Moto by Lenovo". The company reversed that decision in March 2017, when it announced the Motorola name would return in all regions. Motorola Chairman and President Aymar de Lencquesaing said at the time: "In 2016, we just finished transforming ourselves. We have clarity on how we present ourselves."

• 7. Making Things Differently

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  Yang Yuanqing described Lenovo's approach to manufacturing with a specific analogy: "Selling PCs is like selling fresh fruit. The speed of innovation is very fast, so you must know how to keep up with the pace, control inventory, to match supply with demand and handle very fast turnover."

  From 2009 onward, Lenovo pushed toward vertical integration, deciding to make at least 50% of its manufacturing in-house rather than relying on contract manufacturers. The reasoning became clear in 2011, when flooding in Thailand disrupted hard-drive production for much of the industry. Lenovo, because it controlled more of its own supply chain, was able to shift production toward products that did not require the affected components.

  By 2013, Lenovo ranked 20th on Gartner's list of top 50 supply chains. In 2010, it had not appeared on the list at all.

  In October 2012, the company announced it would begin assembling computers in Whitsett, North Carolina. Production of desktop and laptop computers, including the ThinkPad Helix, started in January 2013, employing 115 workers at that facility. Lenovo had already been present in Whitsett since 2008 for logistics, customer service, and return processing.

  In 2018, Lenovo became the world's largest provider of computers for the TOP500 supercomputer list. Two years later, the company reached $60 billion in annual revenues, a figure the source records for the financial year ending in March 2021. In 2021, Lenovo reorganized into three divisions: the Intelligent Devices Group, the Infrastructure Solutions Group, and the Solutions and Services Group.

• 8. Security Incidents and the Superfish Problem

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  In February 2015, Lenovo became the subject of a security controversy when it was revealed that the company had bundled software called Superfish Visual Discovery on some of its laptops. The software was a browser add-on that injected advertising into search engine results pages.

  The deeper problem was technical. To intercept HTTPS-encrypted communications, the software installed a self-signed public key certificate. When the cryptographic implementation was examined, security researchers found that the same private key was used across all installations of the software, meaning that any attacker who obtained that key could exploit every affected machine.

  The head of Superfish attributed the vulnerability to Komodia, the company that built the application, saying it was "inadvertently" introduced. A tech writer for Salon compared the incident to the Sony DRM rootkit scandal.

  Lenovo said it made between 200,000 and some undisclosed upper amount on its deal with Superfish. In 2017, the company agreed to pay a settlement with the US Federal Trade Commission. Lenovo apologized to customers and shareholders, offered affected users free six-month subscriptions to McAfee LiveSafe, and promised to reduce software bundled with its Windows 10 devices to Lenovo software, security software, drivers, and applications users would reasonably expect.

  Separately, from October 2014 through June 2015, certain Lenovo models contained firmware software called the Lenovo Service Engine, which automatically sent system information to Lenovo and installed an optimizer program even on clean installations of Windows. The mechanism used a Windows 8 feature called Windows Platform Binary Table, designed for anti-theft software. Lenovo discontinued the program after security researchers found problematic aspects of its design.