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Company is eyeing expansions into the server and storage markets, plus smartphone expansion, but remains PC loyal

Beijing, China-based Lenovo Group, Ltd. (HKG:0992) is intent on continuing its meteoric rise and ambitious plans to displace traditional personal computer OEMs like Hewlett-Packard Comp. (HPQ) atop the list in international computer shipments. Currently in second place in PC sales, Lenovo opened a $1B USD line in North Carolina.  And already #3 in Chinese smartphone sales, Lenovo is eyeing a U.S. smartphone push.

But its plans don't stop there.

I. IBM Server Division is on Lenovo's Radar

CEO Yang Yuanqing spoke to reporters in the southwestern city of Chengdu, China at the Fortune Global Forum, commenting, "Servers and storage is the business we want to expand and develop.  If there is an acquisition opportunity, we will take it."

Having already purchased International Business Machines, Inc.'s (IBM) personal computer business back in 2005, Lenovo is rumored to be considering jumping straight to the top of the server market, exploring a purchase of the veteran U.S. firm's server business.  

Yang Yuanqing
Lenovo CEO Yang Yuanqing [Image Source: Reuters]

IBM's server unit is currently vying with HP's for the top spot in global sales.  When it comes to a sale to Lenovo, though, price has reportedly been a stumbling block in the pair's discussions.  

IBM Servers
Lenovo is greedily eyeing IBM's server division. [Image Source: IBM]

Servers are a lucrative and coveted business.  Server sales have helped U.S. manufacturers like HP and Dell, Inc. (DELL).  Chipmaker Advanced Micro Devices, Inc. (AMD) recently spent $334M USD to acquire server-maker SeaMicro.  So far that deal has been working out well for AMD, who like its PC OEM counterparts is using its server unit to offset losses from other divisions.

II. Tough Challenges Ahead to Keep up With Exploding Smartphone Growth 

He also discussed the smartphone push, explaining that his company's plan is to first expand into other emerging markets (like Brazil or Mexico) then move on to the most profitable top markets, like the U.S. He comments, "We will be in developed markets in a year.  The gross margin for smartphones is better than PCs -- when you have scale, you will make money."

Lenovo will have to vie with domestic rival Huawei Technologies Comp. (SHE:002502), who has similar ambitions.  Huawei is still outselling Lenovo in the smartphone market moving 9.9 million smartphones in the Q1 2013, versus 7.9 million for Lenovo.  But Lenovo is growing faster -- its sales more than double from a mere 2.5 million units in Q1 2012, while Huawei's sales "merely" doubled from 5.1 million in Q1 2012 [source].

The gadgetmaker also faces a tough challenge from market giants Apple, Inc. (AAPL) and Samsung Electronics Comp., Ltd. (KSC:005930) who spent years carefully generating strong brand images in the U.S. and Europe.

Lenovo smartphone
Lenovo is eyeing a global smartphone push. [Image Source: Jason Mick/DailyTech]

Lenovo also bucked the general slump in the PC market, essentially holding steady at 11.7 million units.  Combined with the strong smartphone growth, Lenovo managed to increase its profit 90 percent on a year-to-year basis.

Mr. Yang says the key reason why his company is hanging on while other PC manufactuers drop off is his company's willingness to offer optimized hybrid form-factors like the Lenovo Yoga tablets-cum-laptops.  He comments, "The PC will not die.  [But] the future PC is not the past PC."

Source: WSJ

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By Motoman on 6/7/2013 8:12:39 PM , Rating: 1
Of course the PC won't die. Your phone is a PC. Your tablet is a PC. I wouldn't be surprised if your next toaster is a PC.

Smartphones and tablets are nothing more, and nothing less, than new form factors of PCs.

Lenovo's convertible design is the best in the business...that's the form that "tablet" computers should have.

But anyway, once again, we need to stop with the retarded "PC is dead" BS. The PC is more important and pervasive than ever. It's just that now it can fit in your pocket.

RE: duh.
By Flunk on 6/7/2013 8:18:40 PM , Rating: 3
Exactly, I'm just glad that tiny PCs are quickly replacing cellphones. You remember, cellphones, slow, crashy, hard to use and featureless phones that just called people. I hardly ever use the phone function on my smartphone at all.

RE: duh.
By Shig on 6/7/2013 8:56:39 PM , Rating: 3
Ubiquitous computing is close, but ubiquitous broadband is a fairy tale for the United States.

RE: duh.
By StevoLincolnite on 6/7/2013 9:10:14 PM , Rating: 3
Well... "Real broadband" is due to lack of competition apparently.

Besides, instead of your Government spending trillions bailing out companies, they should have set aside 100 Billion (Or there-abouts) and rolled out fiber to every home. - Would have created jobs, would have improved your digital economy... And the people get something out of it for once! :P

Our Australian Government is doing it for about $40 Billion, lower population density though, but land-area is still massive.

RE: duh.
By Reclaimer77 on 6/7/13, Rating: 0
RE: duh.
By StevoLincolnite on 6/8/2013 12:04:20 AM , Rating: 2
That's half the problem. Elect a government that's more competent with the peoples money.

Spend money improving infrastructure which will create jobs and business's rather than propping up failed business models.

Conversely, if a tiny nation such as Australia can do it, surely the country that landed on the moon could?

RE: duh.
By lagomorpha on 6/8/2013 9:12:03 AM , Rating: 2
Iirc it was PJ O'rourke that had a really good way of framing why government spending isn't just usually incompetent, it's as a rule imcompetent.

There are 4 kinds of spending:
1) Spending your own money on yourself in which case you're concerned about getting a low price and good quality
2) Spending your own money to buy something for someone else in which case you're concerned about getting a low price but are less concerned with quality
3) Spending someone else's money on yourself in which case you don't care about the price but want good quality
4) Spending someone else's money on someone else in which case you con't care about the price or the quality

All government spending falls into category 4.

RE: duh.
By Reclaimer77 on 6/9/2013 10:18:12 AM , Rating: 2
Elect a government that's more competent with the peoples money.

Okay sure I'll get right on that. Next week sound good to you? :)

lol ok all jokes aside, there's really no such thing as a Government that's efficient with other people's money.

RE: duh.
By TSS on 6/8/2013 6:33:43 AM , Rating: 2
Break the government mandated monopolies on internet companies and it'd be entirely possible within the decade.

yknow, not counting financial markets.

RE: duh.
By Reclaimer77 on 6/7/2013 10:55:49 PM , Rating: 4
Smartphones and tablets are nothing more, and nothing less, than new form factors of PCs.

People can say this all they want, but when you look up the statistics of "PC" sales, tablets and smartphones aren't on this list.

"PC" still means a desktop computer or laptop, like it or not. Smartphones and tablets aren't "new form factors" of the PC.

RE: duh.
By Shig on 6/7/2013 11:57:04 PM , Rating: 2
Always makin' trouble aren't you?

RE: duh.
By Piiman on 6/8/2013 4:41:12 PM , Rating: 3
"PC" Means "Personal Computer" All of those are in fact "Personal Computers"

RE: duh.
By croc on 6/8/2013 8:47:06 PM , Rating: 1
To quote Lenovo's CEO Yang:

"The PC will not die. [But] the future PC is not the past PC."

Pay attention to those that know more than you, you might learn something. Or not...

RE: duh.
By Azethoth on 6/8/2013 5:28:22 PM , Rating: 2
No, you are diluting the term into meaninglessness for no good reason or out of ignorance. "They are all computers" is correct. However PC is the particular form factor that desktops come in. You can throw notebooks in there as well since nobody ever adequately distinguished them or needed to.

So the history of computers so far:
Eniac etc. Building sized monstrosities of which we would only need like maybe 7 for the planet by the time they became city or country sized.

Mainframes. Room sized giants with really high IO.

Minis. Mainframe mini-me. Smaller, less IO.

Servers. Even smaller, weaker versions of the previous, but cheaper and sometimes equivalent when massed together.

SuperComputers. Specialized versions of the above, sometimes just mass clusters of the smaller form factors but with mass IO. Room or building sized.

All the above typically have multiple dumb terminals or individual PC's for user interaction.

PC. Single user at a time computer. Sits on a desk or whatever. The notebook version can roam with you a little on battery power. Both are more or less luggable.

Mobile. Smartphones and Tablets. Freely movable, quite small. First good touch and decent voice interfaces. Hectic UI experimentation to improve interaction.

So what is the future of this progression? Well it is successive nodes that are smaller and thus work in smaller form factors:

Something like Intel's NUC and similar AppleTV sized things?

Google Glass and iWatch perhaps. Other similar body sensors and augmentation eventually.

Smart Dust would certainly be a node of its own.

Eventually it all ends when we have Computronium. This is the final densest / most efficient / most capable computing substance possible in this universe.

So no, phones and tablets are in fact not PC's. By that logic everything is a mainframe, mini, server and supercomputer. The common term you are looking for is "computer".

RE: duh.
By Azethoth on 6/8/2013 5:31:33 PM , Rating: 2
Maybe Jason can fit this into an article so we can lay the specious arguments to rest.

However, it needs more than 3 parts, so maybe not ;-0

RE: duh.
By CSMR on 6/8/2013 5:47:40 PM , Rating: 2
In order to count as PCs smartphones and tablets would need the following:
- Ability to attach to external monitor and other peripherals via standard interfaces.
- Ability to use as a workstation.

No current smartphones currently on sale have these capabilities and so they are not PCs. (The prototype i-mate "Intelegent" smartphone is a PC.)

Only some tablets have these capabilities; only these are PCs.

RE: duh.
By marvdmartian on 6/10/2013 10:17:17 AM , Rating: 2
Not to mention, a desktop PC still has a more robust ability than any smartphone or tablet made, and likely will continue to have it. It's simply a matter of size versus ability. You can only pack so much ability into so small a space.

"Let's face it, we're not changing the world. We're building a product that helps people buy more crap - and watch porn." -- Seagate CEO Bill Watkins

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