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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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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

"If a man really wants to make a million dollars, the best way would be to start his own religion." -- Scientology founder L. Ron. Hubbard

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