Lenovo Vies for Big Win at Olympics
As athletes from 84 countries vie for Olympic medals in Turin, Italy, one Chinese competitor is aiming for a different kind of gold.
Executives at China’s biggest computer maker, Lenovo Group, hope that the exposure of being the Winter Games’ official computer supplier will boost recognition of a largely unfamiliar brand.
Lenovo last year took over one of the world’s best-known brands, when it acquired the personal computer business of IBM Corp., which makes ThinkPad laptops and ThinkCentre desktops. The $1.25-billion purchase made Lenovo the world’s third-largest PC maker after Dell Inc. and Hewlett-Packard Co.
But Lenovo is hardly a household name. The company, now based in Purchase, N.Y., wants to change that by mingling its products among celebrity athletes such as figure skater Michelle Kwan and alpine skier Alberto Tomba, who carried the Olympic torch into the stadium during Friday’s opening ceremonies.
For Lenovo, the Olympics are a global coming-out party -- and a chance to demonstrate that the 6,000 desktops, 800 laptops and 350 servers it has provided to manage statistics, store medical records and access the Internet can withstand cold, snow and high expectations.
“The minute the Games start, everything has to work full speed,” said Philippe Davy, Lenovo’s vice president for Olympic marketing. “It’s timing at 15 different venues, the environment is very tough, a lot of the equipment is outdoors, not very well protected. So it’s very challenging for both the equipment and the people.”
All in front of a global television audience of 3 billion.
Big companies with a global presence have long used the Olympics to promote their brands. In Turin, Lenovo joins such companies as Coca-Cola Co., Visa Corp., Matsushita Electric Industrial Co.’s Panasonic, Samsung Corp. and McDonald’s Corp. as what are called “The Olympic Partners,” big spenders that can use the Olympic rings logo in their advertising.
The financial details of Lenovo’s sponsorship are confidential, but each of the 11 top sponsors is paying more than $80 million from 2005 to 2008.
“It works well from a marketing perspective -- 3 billion is a big number,” said David Daoud, a PC analyst with technology market researcher IDC. “Paying for events like this raises visibility of the name, which is unknown to the general consumer.”
In Lenovo’s case, “the objective is twofold -- to create awareness of the brand, and position themselves as a global player in their category by associating with the most global of sports properties,” said Paul Swangan, director of the University of Oregon’s Warsaw Center for Sports Marketing. “I think there’s immense value in this early stage of their sponsorship.”
Swangan calls it a strategy of “implied size”: If you sponsor the Olympics, you must be a global company, something that doesn’t carry a dollar value, but closes in on a goal -- a return on objectives rather than a return on investment.
In a broader sense, Lenovo’s Olympic sponsorship represents the ascendance of Chinese companies as they try to establish a global presence. Last year China’s TCL Mobile acquired the mobile handset unit of France’s Alcatel, and the Nanjing Automotive Group purchased British carmaker MG Rover Group. Chinese appliance maker Haier Group joined two U.S. firms in attempting to buy Maytag, while China National Offshore Oil Corp. tried unsuccessfully to acquire El Segundo-based Unocal Corp.
“Some of the best-known traditional brands are being acquired and used as entrees to the U.S. and global markets,” says William Bao Bean, vice president of equity research and China technology analyst with Deutsche Bank in Hong Kong. “Some of the industry leaders within China have gained scale, but to be competitive over the long term they have to have scale on a global basis.”
Olympic sponsorship also offers an unparalleled opportunity to impress clients and woo prospective customers, particularly for information technology companies that market the reliability and versatility of their products.
“These projects are extremely complex,” said Davy. “They need to be delivered on Day One to work flawlessly.”
Lenovo has had people working in Turin for two years to ensure that everything works smoothly. If the thrill of victory can give a company a well-publicized boost, the agony of defeat can sting for years. During the 1996 summer games in Atlanta, for instance, IBM was lambasted for failing to deliver accurate and timely results to the media.
“All this technology -- if everything goes right, there won’t be any discussion of it,” Davy said. “You’ll only hear about it if there’s a glitch.”
In addition to building the technological infrastructure for the games, Lenovo began a heavy rotation of television ads Friday during the broadcast of the Games’ opening ceremonies. TV and print ads will continue for 12 to 18 months, with an initial focus on the IBM ThinkPad. (Lenovo has the right to use the IBM name for five years.)
Lenovo expects 100 million TV “impressions” -- the number of viewers multiplied by the number of times they see the ads -- with 64% of them in prime time, said Deepak Advani, Lenovo’s chief marketing officer.
“From a Lenovo brand perspective, the Olympics are a dream fit,” Advani said.
