By Barry Levine / CIO Today. Updated November 08, 2013.
Other PC makers may be hurting, but Lenovo is not. The world's largest PC maker posted a $219 million quarterly profit on Thursday, boosted by sales of tablets and smartphones.
Lenovo has big plans for smartphones, which currently comprise 20 percent of its sales. The company is planning on increasing that to 50 percent within five years, with a focus on emerging markets.
CEO Yang Yuanqing told news media that the aim was to sell competitively priced smartphones in places where most buyers are not able to afford an Apple iPhone, a strategy which the company has successfully undertaken in Asian markets. In Indonesia, for instance, Lenovo scored a 13 percent market share in a year, with higher profit margins than it achieves in its home base of China.
Increased PC Shipments
Yuanqing told Bloomberg News that, in emerging markets, "the iPhone is probably not the best-selling product," and Lenovo's smartphones can be "much more competitive."
Lenovo, which said its overall smartphone shipments have increased 78 percent year-over-year, is reportedly expecting to sell its smartphones in 20 new markets or more in the next year or two, focusing on the Middle East, Latin America and Africa.
The Chinese company's careful strategy in growing its smartphone market would be impressive enough, but it has also increased its desktop PC shipments in its second quarter, year-over-year. The industry as a whole saw a decrease of 7.6 percent over the same period, while Lenovo said its shipment of 14.1 million PCs in the quarter was the fastest sales growth of PCs for any major vendor. Additionally, Lenovo global PC market share increased to 17.3 percent in the period, up from 15.7 percent a year ago.
Lenovo's tablet sales were also booming, with 2.3 million sold in the quarter, for a 420 percent increase year-over-year.
Interest in BlackBerry?
Charles King, an analyst with industry research firm Pund-IT, told us that Lenovo "recognizes personal computing is not linked to personal computers." It has successfully made the move beyond PCs, he said, even as competitors like HP and Dell have found that the smartphone market is "extremely hard to crack."
King added that Lenovo has "done a very good job of expanding its product families and maintaining high standards of quality," going back to when the company first bought IBM's PC division and, facing doubts by many industry observers, maintained the ThinkPad as what he called "the Mercedes Benz of PCs." The company's successful transition into mobile devices, King said, is helped by its strength in its home market of China, the largest national market in the world.
There have been reports that Lenovo was seriously considering making a bid on all or part of the beleaguered BlackBerry, which could give it access to a major installed base in business and consumer markets but also comes with issues, such as what to do with that company's new and proprietary BlackBerry 10 platform.
But BlackBerry appears to have taken itself off the market this week, receiving a $1 billion cash infusion from investors led by Fairfax Financial Holdings, and replacing its CEO with an interim one. Additionally, a recent report in The Globe and Mail newspaper said the Canadian government had decided that a Chinese owner of Canada's major smartphone maker was not acceptable because of national security, but Lenovo CFO Wong Wai Ming said Thursday that no government has yet indicated such concerns.