Lenovo's sudden price war in Hua Xia had caught the other PC brands off guard. There were no signs of this before. Why did they suddenly lower their prices?
Lenovo's main desktop PC was selling at 8,800 RMB. Even if they were using Japanese PC, the shipping cost was still more than 10,000 RMB unless they were willing to sell at a loss.
They could not afford to sell at a loss. If they monopolized the market, they would have to pay a hefty fine. What if Lenovo continued to lower their prices at a loss? They were incurring losses, and they did not even make a dent in their sales. That would be worse.
Laptops were selling for more than 20,000 RMB, and Lenovo's laptop was only selling for 14,800 RMB. The specifications of Lenovo's laptop were on par with Lenovo's laptop. In fact, Lenovo's laptop was even better than Lenovo's laptop.
Lenovo used these three factors to promote their products. First, the cheapest price in China. Second, the best operating system and software. Third, the best specs and even the most advanced VCD optical drive in the world.
Lenovo's price-performance ratio was much higher than the rest of the PC brands.
The rest of the companies started to think of ways to compete with Lenovo. The easiest way was to force Lenovo to raise their prices. This way, everyone will be on the same level, and the rest of the companies can use their PC brands to increase their market share and profits.
Also, after Microsoft's Win95 was launched, the PC sales in many regions had increased. The companies had to admit that a good operating system would attract consumers to buy PCs.
But it was only in Huaxia that they met a hurdle!
This was because Lenovo's PC was installed with Microsoft's Chinese operating system. It was free of charge. The free operating system also included a lot of software. The companies tried the software, and it was very useful.
What they couldn't understand was why the software was free. Just these software should be worth more than 2,000 RMB. It might even be 3,000 RMB. That means the cost of Lenovo's PC was only about 5,000 RMB?
This was not possible!
These big companies had bigger production lines, higher efficiency, and lower parts costs. Their cost was only slightly more than 5,000 RMB. Lenovo was not as good as them in all aspects, and their cost should be higher. 6,000 RMB should be more reasonable.
There were still marketing, transportation, warehousing, retail, etc. How much profits can they get from selling their PC at 8,800 RMB? It would be considered good if they did not make any losses. Lenovo's assets were not much, and if they were to spend money on promotions, how long can they last?
Could it be that their software does not cost money? How much does Microsoft's software cost? From Microsoft's profits, Feng Yu can tell that Microsoft is a leech. When Microsoft buys in bulk, the prices are very high.
Could it be that the software installed by Lenovo is very cheap?
Some of them were developed by Lenovo and could be sold for free. Kingsoft's software was developed by Kingsoft, and because Kingsoft was also a shareholder of Lenovo, the software's price might be lower. But Microsoft's operating system and software will not be cheap. How much did they get? How much was the market retail price?
However, after much research, they could only come up with two conjectures. Firstly, Lenovo's PC hardware was very cheap. Secondly, Lenovo's PC software was very cheap!
They immediately contacted the hardware supplier and began to communicate with each other to probe the other party's purchase price. Although they knew that due to the difference in purchase volume, their prices would definitely be different, but it shouldn't be a big difference.
In the end, this was indeed the case. The cost of hardware manufacturers was here, and to ensure profits, the sales price could not be too low. Also, the hardware manufacturer's representative had said that no matter which PC company they sell to, they will still be the ones making the money. Why would they lower their profits for some market share?
So, they got their answer. The problem was in the software!
They had investigated the market price of Lenovo and Kingsoft's software. They found out that the software in Lenovo's PC should cost more than 1,000 RMB based on the retail price. This was about the same as what they expected.
Excluding the 1,000 RMB, Microsoft's software and operating system should cost more than 200 USD. Even if Microsoft's software was the same as theirs, it should cost more than 200 USD.
Unless they are using Microsoft software at a lower price than what they are getting. But … … was this possible?
They had been working with Microsoft for a long time. When Microsoft was still a small company, they had been working together. Also, Microsoft had been in the PC industry for a long time, and their production and sales volume were much higher than Lenovo. Their brand value was several times higher than Lenovo. If Microsoft's software had different prices, then Microsoft should be the one selling at a lower price.
They analyzed for a long time and came to the same conclusion. They decided to look for Microsoft for confirmation. They want someone from Microsoft to tell them that the software's prices were the same or about the same.
They contacted Microsoft's headquarters, and they were told to contact the Chairman of the Asia Pacific market, Steve Ballmer.
When they contacted Ballmer's secretary, Ballmer's secretary told them that the Chinese market is managed by the company's Director and Asia Pacific Vice-President, Mr. Feng. Mr. Ballmer does not manage the Chinese market.
So, they called the director, Mr. Feng.
"This is Microsoft's Mr. Feng's office. Who are you looking for?" Ralph answered the phone and asked.
"I am Saburo Hiratani, the Vice President of Toshiba's Sales. I am looking for Mr. Feng."
"I'm sorry. Mr. Feng is on leave. If there is nothing important, please contact Mr. Feng after he returns."
What? Mr. Feng is on leave? Contact him after he returns? Is this Microsoft's management style?
Even if he is on leave, you should at least tell me who is going to take over Mr. Feng's work. Also, you should tell me when his leave ends, and you are sending me away?
"Wait a minute. How should I address you?"
"I am Mr. Feng's secretary. You can call me Ralph."
"Ok. Mr. Ralph, when will Mr. Feng's leave end? Or who is going to take over his work during this period? "Saburo Hiratani asked seriously.
"I am not sure when his leave will end. It will depend on Mr. Feng's mood. Who do you think will take over Mr. Feng's work? I'm sorry. No one can replace him. Your name is Saburo Hiratani, right? Leave your contact details. If Mr. Feng is willing, he will get back to you immediately. "
Saburo Hiratani felt his brain was rusty. You are Mr. Feng's secretary, and you don't know when Mr. Feng's leave ends? What kind of job was irreplaceable? He was just a manager, not a special researcher. Why was he irreplaceable?
But Saburo Hiratani had no choice but to leave his phone number and ask Ralph to tell Mr. Feng that he has something important to discuss with Mr. Feng.
Saburo Hiratani did not think it was useful to tell Ralph about this, and Ralph did not even ask. In fact, Ralph already knew what Saburo Hiratani wanted. This was the sixth call he received today, and all of them were from major PC companies. His answers were all the same.
This was the benefit of Feng Yu being the person-in-charge of Microsoft's Hua Xia region.
What was Feng Yu doing now? He was at a pet shop, choosing the pet he wanted.
You've already exceeded your reading limit for today. If you want to read more, please log in.
Login
Select text and click 'Report' to let us know about any bad translation.
