Lenovo Chairman Liu Chuanzhi(front L) shakes hands with IBM Vice President John Joyce(front R) after signing an agreement in Beijing, Dec. 08, 2004.

BEJIJING, Dec. 10 (Xinhuanet) -- The new deal between Lenovo and global IT giant IBM is without doubt the biggest news for the industry. The two sides spent over 13 months combing through every detail of the agreement, which marks a crucial strategic readjustment for both companies.

    Nicknamed the "blue giant" in the business world, IBM helped pioneer the personal computer industry back in 1981. But today, dwindling profits in its PC section have forced it to retreat. Analysts say the deal frees IBM to focus on higher-margin businesses such as server computers, storage and computer chips, as well as software. At the same time, it can also benefit from Lenovo's expansion.

    Senior Research Fellow of Institute of Info. Tech. Development Huang Yong said, "Although IBM has decided to withdraw from the PC industry, it can still make profits from Lenovo's business growth through share-holding in the Chinese company."

    The competition on the Chinese PC market is fierce. But by obtaining one of the world's most valuable brands, Lenovo has now safely upgraded itself onto the world stage.

    Senior Research Fellow of Institute of Info. Tech. Development Huang Yong said, "The IBM brand stands for high-quality product and services. Lenovo is a household name here in China. But in the United States and the entire Asia-Pacific region, many customers are still unfamiliar with Lenovo as a brand. The purchase is a big boost for Lenovo's image."

    And it's not only IBM's name that will benefit Lenovo. Analysts say the company will also receive a boost through IBM PC's research and development power, and its global sales channels. The deal has definitely put Lenovo firmly ahead of its domestic competitors.

(CCTV.com)