Lenovo and NEC form joint PC venture

Tie-up limited to Japan, but could lead to lower prices elsewhere

PC makers Lenovo and NEC have formed a joint venture in Japan, after previously denying that any such deal was in the pipeline.

The move is expected to deliver savings through economies of scale, and might potentially foreshadow an eventual takeover of NEC's PC business by Lenovo, which is already the fourth largest PC vendor globally.

Lenovo and NEC announced today a "strategic relationship" to create the jointly owned NEC Lenovo Japan Group, which consists of Lenovo (Japan) Ltd, and NEC's PC business. Lenovo will hold a 51 per cent controlling stake in the new entity.

NEC is the leading PC company in Japan, but has only a small share of the market globally.

"The agreement with NEC is a perfect fit for our strategy. It reinforces our commitment to our core PC business, while at the same time providing important new opportunities for growth in Japan," said Lenovo chief executive Yang Yuanqing.

The most immediate benefit for both companies is economies of scale, and this could mean lower prices for customers in other territories such as Europe, according to Leslie Fiering, a research vice president at analyst firm Gartner.

"This joint venture helps in the supply chain by raising the volume of components purchased. If Lenovo can leverage this supply chain advantage, it can lead to cost reductions," she said.

And while the joint venture currently seems focused on Japan, it will help Lenovo compete against rivals on the global stage, according to Fiering, who singled out Acer in particular, which passed Lenovo in worldwide market share a few years ago.

"This could be huge when you're going up against a vendor like Acer, which has a huge advantage in terms of cost against the other major PC vendors," she said.

For the moment, NEC and Lenovo will continue to maintain their own brands, while sales and support will continue through existing channels, the firms said.

Lenovo and NEC have also agreed to discuss further co-operation in other areas.