Computer Returns

The Chinese computer company, Lenovo, which bought IBM’s PC division in 2004, has announced it will be opening a small production facility in North Carolina next year.

The world’s No. 2 personal-computer maker says the PC production line now being built at a facility in Whitsett, N.C., will allow the company to become more responsive to U.S. corporate clients’ demand for flexible supplies and product customization. Although the cost of U.S. production will be higher compared with overseas production, an added benefit will be to raise Lenovo’s profile in the U.S., where it ranks fourth in market share by shipment.


Lenovo executives said the new production line isn’t a temporary publicity stunt. “I believe this is the first of many steps to increase our production capability,” Mr. Schmoock said. “I’m very, very bullish about what I can get out of this facility.”

Gerry Smith, Lenovo’s head of global supply chain, said the decision to set up a production site in the U.S. is in line with the company’s broader strategy of localizing its production in major markets as much as possible.

The move is interesting simply as a reflection of the way that more customized manufacturing–as Lenovo’s higher-end computers can be–is localizing.

But there’s also an irony here, given all the attention on Apple’s production in China, most recently with the Foxconn riots coinciding with the release of the iPhone 5.

But what it does is present an alternative strategy, with products Cook knows well, as a way to compete better against (among others) Cook’s current company.

If Cook can only get those Apple maps to work he might even return to the Southeast to see how this works!

Before Tim Cook became VP and ultimately CEO of Apple, he worked at IBM–what would become Lenovo’s US headquarters–in North Carolina on manufacturing logistics. And this move is effectively a return of ThinkPad production to IBM’s former stomping grounds.

Apple’s still not going to bring device assembly to the US anytime soon. They sell generic widgets, not customized machines as this plant will produce. And even as expensive as their products are within segments, most of what they sell is still much cheaper than a loaded laptop.

15 replies
  1. chrarlie says:

    Or, I don’t know, we pass a law that put a 25% tariff on Chinese assembled goods. Worked in Brazil — Foxconn opened a factory in months for ipad assembly.

    I’d agree the Foxconn model — hundreds of thousands of humans assembling — isn’t going to work in the US. Steve Jobs felt badly burned with his automated factory, but perhaps a new leadership will feel differently.

    If anything, the risk of depending on one supplier (and country) to assemble your products is just too much.

  2. lefty665 says:

    Funny to have small computers come back to the area where IBM XT3270’s ate IBM’s mainframe terminal manufacturing lunch. That may be about when IBM realized it had lost control of the market. Their horror at taking a dollar out of one pocket and only putting 75 cents back into the other was palpable.

    The terminal mfg folks in Raleigh were outraged that those upstarts in Boca Ratan had been permitted to challenge big iron. The revolution was on!

  3. jerryy says:

    Locating their new facility just down the road from Apple’s very large data and research place (in Maiden, NC) also gives Lenovo the chance to open up good lines of grace with Apple. (Apple and IBM used to work toghether. A lot of that work went to Lenovo when IBM sold them the laptop business.) Suppose Apple decides to use chips from someone other than Intel in a new product. It helps to work with someone already familiar with your operation.

  4. lefty665 says:

    @emptywheel: Yes they were, wasn’t much of anyplace else for them to come from. They sure broke the mold. A bunch of the Boca folks got wonderful retirement/buyout packages, remember them?

    My then BinL in Raleigh was ripped beyond belief at the XT3270. He could not believe it. There were a lot of things he refused to believe. Hey, if we can get the world arranged the way we like it, as IBM did for decades, nobody wants change. Scheduling product releases to maximize revenues couldn’t last forever.

  5. person1597 says:

    By the time IBM released the 3278 terminal emulator for the PC, the monopolistic cat was out of the bag.

    Several years earlier (1978) IBM had lost the 13 year antitrust action (remember David Boies? — he was assistant counsel for IBM) and was forced to divulge the line protocol for terminals and printers attached to the IBM mainframes.

    Based on the technical information released in the settlement, Type A coax compatible devices, (reverse engineered by garage shop entrepreneurs like yours truly) offered second sources for the IBM technology. Using HP’s 1615 logic analyzer, one could monitor and even emulate the SNA data flow protocol with a smattering of fast custom microcoded state machines supervised by the eight bit microprocessors of the day.

    Needless to say, “IBM compatible” had special meaning well before project Acorn… aka the [undocumented open architecture] IBM PC.

    Incidentally, Boies was on the gov’t side in the Microsoft anti-trust litigation. Ironic that the gov’t victory in that case popped the technology bubble that had been building continuously from the earliest days of the PC revolution.

    The Boies giveth, the Boies taketh away.

  6. lefty665 says:

    @person1597:Neat! XT3270 must have been ’83-’84, Don’t remember how much earlier the PC iteration was. I got started with Datapoint in ’78. Their origin as CTC was front end terminal strings. The 8008 was theirs, and Arcnet their LAN. Great engineers, terrible marketers.

  7. person1597 says:

    Datapoint was seminal for Intel… and the world. Working at Zilog from ’76-78 I heard those stories from Ralph and Federico. It can’t be overstated how much impact that genesis had on the electronics industry.

    Everyone thought it was crazy to keep instruction set architectures compatible from one generation to the next. Once the 8080 established the root, all that followed was vertical. Even so, what a pain to bring all that legacy code forward to the new chip generations.

    Even the intel 80286 couldn’t provide bug-free emulation of the 8080 codebase.

    Nonetheless, CIC was the opening in the intellectual crust from whence all future deals flowed. Truly ground zero for the microprocessor revolution.

  8. hcgorman says:

    Funny thing- I have a lenovo- it is four years old and I have been having problems with it lately but it is extremely light and up until the past few months it has been trouble free… so I decided to buy a new one-in July- it arrived (from China) in mid august (weeks after they promised I would have it) and it was not working properly. I called and they sent me a box- I returned it and heard nothing from them for several weeks and then they sent me the broken computer back….still broken. I am a patient person but this was too much. I called and got the run around until I finally sent a letter to the CEO explaining that I wanted to sue them but did not have a computer that was reliable enough to get the complaint done…I finally got a return call and now after almost three months I am told my new computer is finally on its way-from China. sigh.
    it better not be another broken one.
    I hope having a plant in North Carolina takes care of some of these problems….

  9. lefty665 says:

    @person1597: Wow:) My understanding was that they essentially convinced Intel there was a market for integrated CPUs, in large part by providing the capital to reduce a 2200 processor board to a chip, the 8008. Personal computing got started when Datapoint decided not to use it because you couldn’t replace components like on a cpu board. It showed up on the cover of Radio-Electronics as the heart of the first personal computer kit.

    The first Datapoint I had that used a microprocessor was a 1500 with a Z80. MOBO’s hanging on my office wall, I can see the Z80 as I type. It was spooky being able to dive into Intel assembler and be very comfortable. The 1500 was main board with expansion slots, unusual before the PC adopted that architecture. The language, Databus lives on as ANSI PL/B. It is interesting because it compiles to object code and interprets to the host OS/architecture. Makes it remarkably portable. It was trapped for multi users/net from the get go.

    I apologize EW for the OTOT (off topic old techie) reunion. Can I send you a picture of Grace Hopper and a bottle of scotch as atonement? It’s awfully nice to talk to someone else who was there. Wrenching computing out of the hands of big blue was hard. Your dad and his buddies didn’t want to let go.

  10. Eric Hodgdon says:

    Astounding conversations.
    Why these posts are so fantastic as to be unbelievable.

    I worked at National Semiconductor in the late 1970s in an entry-level job. And from there on through other companies in manufacturing until 1987, where I was an engineer of sorts.

    Currently I’m blessed with extreme poverty, and find the suicide of this country continuing on with the mindless expertise of free-market thinking, an insane public, and best of all, our very own highly educated class praising their imbecility by assisting so. My dear friends, this does not necessarily refer to any of you.

    Free-Market thinkers deserve the HUBBA.

  11. emptywheel says:

    @lefty665: In the interest of full disclosure, I should reveal my father was one of those mainframe to Boca guys. Left in 1984, though, so didn’t get a big buyout. Me and my brothers–especially the older of the two–even had our own little parts in that saga.

  12. lefty665 says:

    @emptywheel: I second that DISH, please. I’ll up my offer to Grace Hopper and Lynn Conway pictures.

    You were part of THE transformational piece of the small systems revolution. Boca took PCs out of the game and nerd business (that includes Apple) and put ’em on desktops in big numbers. I’ve forgotten a lot about that era, but can still clearly remember the cover of Byte with the first IBM PC. I knew my world was changing.

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