Lenovo Group Ltd overtook Hewlett-Packard Co in the second quarter to become the world's largest personal computer maker by shipment volume, even as the industry continued to experience a record decline, international research firms IDC and Gartner said on Thursday.

Lenovo shipped at least 12.6 million PCs in the second quarter while HP delivered about 12.4 million, figures from both consultancies show.

Global PC shipments slumped 10.9 percent year-on-year to 76 million units in the period, the fifth consecutive quarter of declines, according to Gartner.

"We are seeing the PC market reduction directly tied to the shrinking installed base of PCs, as inexpensive tablets displace the low-end machines used primarily for consumption in mature and developed markets," said Mikako Kitagawa, principal analyst at Gartner.

Nonetheless, Lenovo Chairman and Chief Executive Officer Yang Yuanqing is determined to pursue profit growth in the struggling industry. Yang said he was pleased that even in the toughest PC market ever, Lenovo was still able to gain market share and improve profitability.

"The battle for PC leadership could certainly still go back and forth. But I am fully confident that there remains substantial room for profitable growth and groundbreaking innovation in the global PC marketplace," said Yang.

Lenovo grabbed 16.7 percent of the worldwide market in the last quarter, surpassing long-time leader HP, according to IDC and Gartner. The United States-based company now has about 16.4 percent of the market.

Regionally, however, it's a mixed picture for the Chinese company.

Lenovo's business in the Americas, Europe and the Middle East saw steady growth while its Asia-Pacific business declined, said IDC.

"The headwinds in China continued to affect Lenovo's home turf significantly. The company ended the quarter with a double-digit decline in the Asia-Pacific region, excluding Japan," it added.

In the third quarter of last year, Lenovo briefly claimed the top spot but HP quickly reclaimed the title in the following quarter.

HP retains advantages in key regions including the US, Latin America and Europe.

"The Asia-Pacific market has been a weakness the last three years for HP, but preliminary second-quarter results suggest an improvement of their performance in the region," said Gartner.

During a visit to Beijing in June, HP CEO Meg Whitman said her company is committed to building a stronger presence in China as the country becomes the most important regional market for HP's various businesses.

Global PC makers are vigorously exploring new businesses as the PC industry's star dims.

HP is heavily invested in software and services, which are major components in the company's five-year revival plan.

Dell Inc, the third-largest PC vendor, is betting on its new software arm to generate $5 billion in sales in the coming years.

In the meantime, Lenovo is turning its attention to servers and consumer electronics for higher profits.

A joint venture with the US data-storage company EMC Corp started to sell server products earlier this year.

Lenovo is ready to challenge Apple Inc and Samsung Electronics Co on the smartphone front, and it is poised to become the biggest smartphone vendor in China in two years. Yang set those targets for Lenovo in May.

By the end of this year, turnover in the smartphone business is projected to make up more than 15 percent of the company's total, said Liu Jun, senior vice-president of Lenovo.

gaoyuan@chinadaily.com.cn

(China Daily USA07/12/2013 page18)