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Lenovo Eyes the Mobile Market

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.

Ambitious goals
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.

Flagship phone
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?

24 comments on “Lenovo Eyes the Mobile Market

  1. Daniel
    May 31, 2013

    “After securing its place in the PC market, Lenovo Group is now hoping to establish similar clout in the mobile market”

    Jennifer, I think Lenovo had some business diversification plans. I read that apart from mobile, they are in discussion with IBM for taking over their server business too.

  2. Taimoor Zubar
    May 31, 2013

    A colleague of mine brought Lenovo's K900 from China recently and it seemed pretty good in terms of its features and looks. Moreover, compared with other leading models such as S3 and HTC One, it seemed to be slightly under-priced. But that may have been there because it was an introductory offer. Overall, I found the phone to be good in terms of value for money.

  3. Taimoor Zubar
    May 31, 2013

    I read that apart from mobile, they are in discussion with IBM for taking over their server business too.”

    @Jacob: Lenovo took over IBM's laptop business around 7 or 8 years back when IBM was looking to focus more on the data side. And so far Lenovo has done reasonable well in terms of maintaining the quality and also coming up with new models. I don't think it will be a bad move if IBM decides to hand over the server business too to Lenovo.

  4. Himanshugupta
    May 31, 2013

    So, what was the price of the K900 smartphone? I think if Lenevo use the right strategy then they can compete with Samsung and Apple. In India there are players such as Micromax, Karbonn, Xolo etc which are selling smartphones with 80-90% of features in topend phones at 1/3 the price. Ofcourse the quality and other things will be compromized but looking at the value for money a lot of ppl are buying these phones. I have couple of colleagues who have bought phones cheaper smartphones and others who have Samsung and HTC. When we compared them the we were astonished by the value for money for cheaper phones.

  5. hash.era
    May 31, 2013

    Im not sure how good it will be for Lenovo since for them to enter now is very difficult. There are many giants who have entered and gaining top spots by some margins for a longer period of time plus the brand name of Lenovo is not that famous as some of the others who are in the market.   

  6. Mr. Roques
    May 31, 2013

    Out of the phone and tablet markets, which do you think will be easier (or less hard) for Lenovo to get its share? I think there's less real competition in the smart phone market. 

    I still believe Lenovo is fighting with the 2nd tier companies.

  7. Hailey Lynne McKeefry
    May 31, 2013

    There's a good stable of examples of PC/mobile PC makers getting into new industries. Increasingly, a smart phone is nothing more than a PC that you can slip into your pocket. I'd be interested to know what sort of inroads they are making with domestic phone service providers. If one of the big providers, say AT&T, T-Mobile, Verizon, or Sprint, got behind the Lenovo offerings it could go along way to getting consumers excited about it.

  8. _hm
    June 2, 2013

    Lenovo had strong desire to acquire BB/RIM. How much progress has benn made in this direction? Apple has die hard fan, so Lenovo may be mainly taking away Samsung customers.

    Lenovo also needs to look for innovation along with price war. By the way what OS is used for Lenovo Intel mobile phone?

  9. Lavender
    June 2, 2013

    Hi, Jennifer, I think Lenovo tapping into mobile market is a necessary step. The reasons are following:

    The continuous weak performance of traditional PC industry really worries all PC manufacturers, and forces them to change. 

    China's huge customer base largely reduces difficulities for a later participant. By cooperation with Chinese carriers (China mobile), Lenovo has made great achievement in smartphone and tablet sales. 

    On the basis of price and technology advantage, Lenovo has the potential to compete with Apple and Samsung. 

  10. Daniel
    June 3, 2013

    “so far Lenovo has done reasonable well in terms of maintaining the quality and also coming up with new models. I don't think it will be a bad move if IBM decides to hand over the server business too to Lenovo.”

    Taimoor, no doubt in that. Eventhough it's a Chinese brand, they are maintaining the standards and quality; otherwise they cannot sustain in a highly competitive market.

  11. Lavender
    June 3, 2013

    Despite some technology advantage, there is a fact that lenovo and other Chinese smartphone companies are always lagging behind in cutting-edge or advanced innovation, giving less expectations to users.

    But Apple began the touch screen and voice revolution, and Samsung also shows strong capability in its galaxy phone, such as the use of AMOLED…

  12. Tom Murphy
    June 4, 2013

    Lily:  While the issue remains controversial on legal grounds, it was stunning how fast Samsung caught up with Apple with touchscreen displays.  Would it surprise you to see Lenovo get into that game just as quickly? Or, possibly, to come up with a new innovation that Apple and Samsung didn't think of?  I would find that more likely than Nokia succeeding it its big comeback, and I would love to see Nokia pull that off.

  13. Tom Murphy
    June 4, 2013

    Truth: I was given a Lenovo thinkpad to use when I arrived at my company. It's the best laptop I've ever had, even better than the IBM thinkpad I had back in the 90s.  My other machines include brands like Asus and HP. I would replace either with a Lenovo.

    Does anyone else have experience with a Lenovo computer?  I know it anecdotal, but I'd be interested to hear if your experience matches my own.

  14. Lavender
    June 4, 2013

    Hi, Tom, I really will feel surprising and happy if Lenovo comes out with something unique. 

    Despite good achievements in smartphone, and PC, the huge Chinese consumer base plays an important role. To walk ahead, Lenovo should introduce some really catchy product; following the common trend is not enough to compete with Apple and Samsung in the field of high-end smartphone and tablets. 

  15. Daniel
    June 6, 2013

    “Does anyone else have experience with a Lenovo computer? I know it anecdotal, but I'd be interested to hear if your experience matches my own”

    Tom, am using Lenovo Ideapad Y series, its good in quality and performance wise.

  16. Daniel
    June 6, 2013

    “Despite some technology advantage, there is a fact that lenovo and other Chinese smartphone companies are always lagging behind in cutting-edge or advanced innovation, giving less expectations to users.”

    Lily, you may be true with Smartphone and tablets. But with PC and laptops they are the one among fore front players with latest addition of products based on cutting edge technology and innovation.

  17. Wale Bakare
    June 6, 2013

    Lenovo could cause major upset in mobile scene if eventually acquired Blackberry as being speculated. Samsung is positioned well ( different mobile phones for all the classes of users – both high and low ends ) among all the mobile phone makers, and it's also opted for Intel processor for its Galaxy Tablet. I cant see Lenovo competes with Samsung, although it could be a tough markets for them all should that happen. 

  18. Mr. Roques
    June 7, 2013

    Oh, there's no difference? I have to disagree. 

    If they try to win at both, they will probably fail at both. Huawei focused on phones and has done really well. After people get a sense of the phone and read reviews, it can sell high end tablets. 

  19. Taimoor Zubar
    June 8, 2013

    @Himanshugupta: Six months ago, the introductory price in China was around USD 500. It was very cheap compared to specs it was offering. I agree that many Chinese phones have really sound features and good looks but they're selling at a lower price because they don't have a strong brand image like Samsung and Apple to back them up.

  20. Taimoor Zubar
    June 8, 2013

    no doubt in that. Eventhough it's a Chinese brand, they are maintaining the standards and quality; otherwise they cannot sustain in a highly competitive market.”

    @Jacob: I think apart from the quality, they have also become very competitive with price. IBM was always above other companies when it came to price but Lenovo has ensured they're able to compete on price with other leading brands while maintaining the same quality.

  21. t.alex
    June 10, 2013

    I think Lenovo can learn from Samsung and other players: use Android operating system, use Google Play store or just create their own store, and rigorously copy (with subtle improvements) features from Apple or others.

  22. Daniel
    June 12, 2013

    “I think apart from the quality, they have also become very competitive with price. IBM was always above other companies when it came to price but Lenovo has ensured they're able to compete on price with other leading brands while maintaining the same quality.”

    Taimoor, I can agree about Lenovo in terms of quality but not in price. Lenovo is costlier, when compare with other brands like Samsung or Sony.

  23. Taimoor Zubar
    June 19, 2013

    @Jacob: Which specific product or line of products are you talking about? I've compared Lenovo's laptop prices with Dell and HP and I find it to be very competitive and within the same range.

  24. Daniel
    June 24, 2013

    “I've compared Lenovo's laptop prices with Dell and HP and I find it to be very competitive and within the same range.”

    Taimoor, if we compare it with HP and Dell also, I feel that Lenovo's prices are 10-20% more than that of these two brands.

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