Lenovo: "The PC Will Not Die"
June 7, 2013 7:32 PM
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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. (
) is intent on continuing its meteoric rise and ambitious plans to displace traditional personal computer OEMs like Hewlett-Packard Comp. (
) 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 (
) 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.
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.
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. (
). Chipmaker Advanced Micro Devices, Inc. (
spent $334M USD
. 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
), 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 [
The gadgetmaker also faces a tough challenge from market giants Apple, Inc. (
) and Samsung Electronics Comp., Ltd. (
) who spent years carefully generating strong brand images in the U.S. and Europe.
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."
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6/7/2013 11:57:04 PM
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