The PC market was shaken up this week as a leading researcher named Lenovo Group Ltd. (Hong Kong: 992) the world's top PC maker. It's a big deal, but it's not entirely surprising in light of Hewlett-Packard's inability to right itself. (See: Saving a 'Fundamentally Flawed' Business.)
Gartner reported that Lenovo had a 15.7 percent share of the PC market in the third quarter, when it shipped 13.77 million units. HP, the perennial industry leader, had a 15.5 percent share.
Of course, the PC market is shrinking, so Lenovo's achievement may be less impressive than it would have been five years ago. But no matter the fate of PCs (which I'm not willing to declare extinct), Lenovo is innovating its supply chain in ways that may be giving it an edge. Let's not forget -- that's what we said 10 years ago about Dell, now the No. 3 PC maker.
In addition, Lenovo is innovating on the backend. It's using Jabil Global Services and UPS Logistics to manage two segments of its after-market service and repair operations. (See: Recovering Lost Profits Through Reverse Logistics.) Although Lenovo is outsourcing some of its supply chain management, it's also breaking from the PC pack by leaning toward a vertically integrated manufacturing model. (See: Is Outsourcing Losing Its Appeal?)
Although the PC market is shrinking, it's still a pretty good proving ground for supply chain innovation. HP changed the game in the late 1980s by moving toward a demand-driven supply chain. Dell adopted the BTO model in the early 1990s. Lenovo is an early example of effective use of the cloud. Like automakers, PC makers have been under varying pressures over time to make their products better, cheaper, faster to market, smaller, more configurable, and now easier to dispose of. Lenovo is proving there's still a lot of room for inspiration. Although a supply chain may not make or break a company, it clearly remains a competitive weapon.
Lenovo has been able to consistently encash on the legacy left behind by IBM's PC business. The role of supply chain in maintaining relationships with corporate clients that IBM had is impressive despite the presence of the reputable Dell who is always knocking on the door.
What I have noticed is that my company (PwC) has been buying Lenovo since its acquisition of IBM's business while buying few machines of Dell but recently it switched completely to Lenovo so I can correlate to Barbara's stats. Like my company, I believe it is the corporate side that is contributing to Lenovo's share.
What are the main factors that propel Lenovo to be number one today ? I think good supply chain management is one of them. But other than that? Quality? Prices? Customer loyalty ?
Barbara, one thing the market for PC and Laptops are declining for the last several quarters and market is still expecting further corrections. But I won't think that it may be get disappear from the market for another decade.
I have a good video to say what will happen to the computers in future and who is going to get replace by it. Corning Glass
t.alex, obliviously Lenovo's' good business strategy helped them. Mean time HP had made a untimely declaration that they are planning to spin of their PC/Hardware business. Markets are always volatile and such inappropriate decision and declarations can turn bad.
Certainly a great feat from Lenovo. With the continuous innovation in supply chain and manufacturing process, lenovo is winning over competeitors. The other PC makers are also look for such options of using cloud to bring down the operational expenses and improve the performance.
So true, supply chain remains a competitive weapon. If you have two companies with the same product, exactly same technical specifications, it makes a lot of difference how their supply chains are managed. In today's market when the world is getting smaller I would say supply chain management is what makes the cutting edge. Whether its sourcing or logistics or operations all of this is equally important if you want to remain as the leader.
Hi: Here is what Gartner said about Lenovo's No. 1 ranking:
Lenovo took the No. 1 position in worldwide PC shipments for the first time in the company's history, as its share increased to 15.7 percent, while HP's global PC share was at 15.5 percent (see Table 1). In addition to acquiring other vendors, Lenovo has also taken an aggressive position on pricing, especially in the professional market. As a result, Lenovo has achieved significant market share gains over the last two years, exceeding regional average growth rates across all regions.
Hi Nemos: Definitely that is part of the reason. The other is that PCs are expected to be replaced by the ultrabook, which are priced at around $1,000. Once these prices decline, look for PC prices to decline even further. But I still think the PC market has life in it yet, particularly in the business space.
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Archived Dialogues
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Euro-Crisis: What It Means for High-Tech Firms Join EBN Editor in Chief Bolaji Ojo and Contributing Editor Jennifer Baljko on Thursday, July 12, at 10:00 a.m. EDT for a Live Chat on high-tech and Europe's economic difficulties.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
While no one really can accurately predict the future, we can take guidance from another Drucker saying which is the best way to predict the future is to create it.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.
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