After securing its place in the PC market, Lenovo Group is now hoping to establish similar clout in the mobile market.
The China-based company is looking to aggressively build its reach beyond computers and laptops, and become “PC Plus” leader. Yang Yuanqing, Lenovo chairman and CEO, boasted about the company's progress last week in a news release that announced Lenovo's financial results:
Not only were we the fastest growing among all major PC players, with record market share, revenue, and profitability, more importantly, our smartphone and tablet businesses saw dramatic growth. In fact, smartphone shipments were 3.7 times greater than last year globally and we are now number two in the China smartphone market. Going forward, we will focus our investments on the fast-growing tablet, smartphone, and enterprise hardware areas, while working to enhance the profitability of our core PC business.
Statements like this add weight to stories popping up in niche and mainstream media pointing to the company's ambitious plans to become a household name for multiple device platforms.
For instance, the China Daily, citing a Lenovo senior executive, reported that the company wants to sell 60 million smartphones in fiscal year 2013, which started April 1. Lenovo shipped 23.5 million smartphones in 2012, the article said, referencing data from IDC.
And, in a nod to how big it's thinking, Lenovo sees worldwide giants Apple and Samsung as its main phone competitors, not the second-tier players — another signal of how it will be ramping its supply chain, operations, logistics, and product development strategies.
Of course, the PC market is looking pretty dismal today, which is forcing OEMs to expand into adjacent consumer electronics markets to capture sales. Worldwide PC shipments tumbled 13.9 percent year-on-year in first quarter of 2013, which was far worse than the forecasted decline of 7.7 percent, according to the IDC Worldwide Quarterly PC Tracker.
The results, which indicate consumer migration away from pure-play PCs towards tablets and smartphones, signal the fourth consecutive quarter of year-on-year shipment declines, and the extent of the contraction makes it the worst quarter since IDC began tracking the PC market quarterly in 1994, the firm noted.
If there's a company that could pull off this rapid growth in a new business segment, it may well be Lenovo. Look at the advantages it already has.
The company already has significant PC sway, and its increasingly familiar brand recognition is stretching globally beyond China. Since acquiring IBM's PC business eight years ago, Lenovo's ranking has climbed steadily, putting greater competitive pressure on industry bellwethers Dell and HP. As the San Jose Mercury News put it, Lenovo is “a sliver away from unseating Hewlett-Packard as the world's top PC maker by shipments.”
Its geographical influence can't be underestimated. Being based in China immediately gives it access to a huge regional population and puts it on the government's preferential “favorite son to do business with” list, something we often don't talk about much publicly in the electronics industry but something that anyone doing business in China knows all about.
Lenovo is a cash cow, at least today. The company's latest financial report had some big numbers: Full-year sales rose 15 percent from the prior year to $34 billion; full-year profit climbed 34 percent to 635 million; and quarterly profit jumped 90 percent.
Lenovo has already launched a product that may catch attention: its Intel-powered K900 flagship smartphone in China, with availability in international markets expected this summer, said a report from Mobile Live World. The phone, Lenovo claims, is the world's first smartphone to house Intel's latest Atom processor Z2580, a dual-core runs at speeds up to 2GHz.
And it has developed a strong supply chain, which balances in-house and outsourced manufacturing strategies, leverages China's local supply base, and is optimized to meet demand from kinds of customers.
With all these elements in place, it certainly looks as if, on paper at least, Lenovo is positioning itself for global dominance in some electronics areas. Do you think Apple and Samsung feel threatened? Is Lenovo even on their radar screens?