The Opening of the PC Market

Now that Chinese PC Manufcturer Levono has acquired IBM's PC Division, the question is what's the strategy?  As acknowledged commodity business, the answer is in commoditization.

The last PC maker to arise to ascendency was Dell through supply chain efficiencies.  Today they also called upon Red Hat to lower prices.  Interestingly enough, they commented that: "When was the last time you saw a successful acquisition or merger in the computer industry?"

Levono will undoubtedly compete on price with a low-cost manufacturing base.  But I believe their commoditization strategy is more than hardware.  Levono was spun out of the Chinese Government's ICT Academy of Sciences, a hotbed of open source which also created Red Flag Linux, the Chinese Linux distribution.  Given their competencies in open source, longer term political and business incentives, the leverage of their home market size and acquired 3rd place global market share -- this is the company to bring open source to the desktop.

Jonathan Schwartz suggests the commoditization move will be a shift from PCs as products to PCs as services.  I'd suggest that that's Dell & HP's move, not Levono's.  IBM wins not just in exit and financial performance -- they are forcing the commoditization of non-core business while encouraging the opening of the client they need to compete with MIcrosoft.  Jeff Nolan points out that IBM is taking a 18.9% stake in Levono.  Consumers, of course, win.

The press and blogs have given zero attention to the open source implications of Levono.  The above is speculation and it will take either patience or real investigation to get to the bottom of this story.