In 2004, Lenovo had no external markets and its growth prospects were, therefore, extremely limited, especially since its previous efforts to diversify had been unsuccessful. With annual revenue of $3 billion and a 30 percent market share at the time, the company made a dramatic decision in 2005 that many thought was insane: Lenovo purchased IBM’s debt-laden global PC division, which had annual revenue of $13 billion, for $1.25 billion. It was a move that escalated Lenovo into the worldwide number three slot in the PC market, with a 7.6 percent market share, behind HP and Dell, and a position within the ranks of the world’s top 500 companies.

Although Lenovo continued to prosper following this acquisition, its growth rate fell behind the growth in the overall PC market. As a consequence, it lost its number three berth to Acer, which was in the process of acquiring US-based Gateway and Packard Bell, a company that had previously been part of the Japanese giant NEC.