A Lenovo smartphone advertisement in a Beijing subway station. The world's second largest PC producer by shipments now plans to become a strong competitor of Apple and Samsung in the production of smart electronic devices. Provided to China Daily

As PC era ends, company seeks profits from other hardware

Lenovo Group is eyeing the high-end mobile market and plans to make it generate profits in the post-personal computer era.

The world's second largest PC maker by shipments has speeded up its business transition this year in efforts to become a strong consumer electronics company to compete with Apple Inc and Samsung Electronics Co.

"Lenovo will become the No 1 smartphone vendor within China in two years," said Liu Jun, senior vice-president of Lenovo and head of the company's PC, smartphone and tablet businesses.

Sales turnover of Lenovo's smartphone business is projected to make up more than 15 percent of the company's total by the end of this year, he said.

On May 16, the Beijing-based manufacturer released its latest smartphone, the K900. Selling at 3,299 yuan ($538), the company hopes the new device will attract customers from Samsung's Galaxy Note series and Apple's iPhone 5.

Lenovo hopes to sell 1 milliion of the new devices in China, saying the market needs new gadgets to break Apple and Samsung's domination of the high-end market.

High-end customers in China need more options and Lenovo is poised to fulfill that demand, said Liu.

Smartphones priced above 3,000 yuan are categorized as high-end products. They took 10 to 15 percent of the market share in China, according to Chen Wenhui, Lenovo's vice-president and head of its mobile business.

During the first quarter of this year, Lenovo's China market share lagged behind Samsung, Nokia Corp and Apple because the company's smartphones did not get much market attention until last year, the report pointed out.

Samsung took nearly a quarter of the nation's market share while the declining Nokia managed 15 percent. Accused of being slow to release the latest iPhone and of having a poorer warranty than in other countries, Apple grabbed about 13 percent of the market share in China, said iiMedia Research.

Although overseas brands took more market share and sell more high-end devices in the country, there is "a strong momentum" for local brands to take market share from overseas vendors in the coming quarters, added the research company.

Lenovo was the top local smartphone maker in terms of market share.

PC slump

Lenovo's "attack" strategy in the mobile market comes in the middle of a damaging recession in the PC industry.

United States research company IDC warned earlier this year that international PC shipments are poised to suffer a double-digit slump in the second quarter of this year.

Global PC makers are eagerly seeking new profit boosters that may replace the decades-old PC business. How to prepare for the inevitable slump in the PC sector is the most discussed topic among top vendors.

The world's largest PC manufacturer, Hewlett-Packard Co, is trying very hard to turn itself into a software and service company.

Dell Inc, the third-largest, also hopes its 1-year-old software group could bring the company at least $2 billion in three years.

Nonetheless, Lenovo has decided to stick to hardware manufacturing but is turning to consumer electronics and the corporate server sector for higher profit margins.

Last year, the Chinese company joined hands with US data-storage company EMC Corp to set up a joint venture selling servers in the Chinese market. Lenovo also tried to acquire IBM's server unit in April but returned empty-handed.

Analysts said compared with the server business, which requires more time and energy to attract customers, the consumer market is a much easier way to generate revenue in the short term.

Day's before Lenovo released its new smartphone, company executives set another target for the consumer business: selling 100 million terminals - including smartphones and tablets - before the end of this year.

"It's a reasonable target for us because we are ready to join Samsung and Apple as the world's top consumer electronics vendor," said Liu from Lenovo.

gaoyuan@chinadaily.com.cn

(China Daily USA 05/27/2013 page15)