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FANCY PRODUCT: A Lenovo salesman showcases a laptop—Idea Pad Yoga—at the Las Vegas International Consumer Electronics Show in January 2012 (YANG LEI) |
"We benefited in three ways from the IBM acquisition," said Liu Chuanzhi, former board chairman of Lenovo, in an interview with China Central Television, the country's national TV station. "We got the ThinkPad brand, IBM's more advanced PC manufacturing technology and the company's international resources, such as its global sales channels and operation teams. These three elements have shored up our sales revenue in the past several years."
In August 2012, Lenovo signed an agreement with the U.S.-based data-management company EMC Corp. to develop and sell server and storage technologies.
In September 2012, Lenovo delved into software development after buying the U.S.-based cloud-computing company Stoneware Inc. for an undisclosed amount. Stoneware has millions of users in the educational field and the U.S. public sector.
The same month, Lenovo agreed to buy the Brazilian consumer electronics maker CCE in a cash-and-shares-deal worth about 300 million Brazilian reals ($147 million). The purchase of CCE, Brazil's largest domestic maker of electronics, will allow Lenovo to more than double its share of the PC market in the world's sixth largest economy—from 3.7 percent to 8 percent—and diversify its product portfolio from single PCs to other electronic products such as tablet PCs and smart phones.
The deal will also add mobile phones and televisions to its product line in Brazil, where it recently announced plans to build a factory at a cost of $30 million.
Lenovo will continue to make acquisitions to boost its growth in global markets, said Lenovo's Chairman Yang.
Despite Lenovo's market performance in the PC business, worries abound that the sector's low profit margins will eventually become a burden for Lenovo with the increasing popularity of tablets and smart phones.
In the third quarter, 87.5 million PCs were shipped in the world, down 8.3 percent year on year, said Gartner.
Because of the current global economic slowdown and competition from mobile Internet products, PC shipments have been feeling the squeeze.
Some analysts say tablets will outsell PCs by 2016 or possibly earlier.
"Becoming the clear leader in global PC market of course remains one of Lenovo's aspirations, but it only represents one more milestone in our journey as a company. We are setting our sights on delivering long-term profitable growth, while leading the way forward into the PC Plus era," said Yang.
Lenovo launched a new strategy this year called "PC Plus" to focus more on other product lines such as mobile devices and build its cloud-computing offerings that allow users to access data remotely or control different devices via a single computer.
Yang said that Lenovo is looking to expand its tablet and smart phone businesses.
In the third quarter, the sales revenue from Lenovo's Mobile Internet and Digital Home Department, such as tablet PCs and smart phones, totaled $718 million, accounting for 8 percent of the company's total sales revenue between July and September. During the period, Lenovo smart phones held 13 percent of the market share in China, up 11.6 percent year on year and second to Samsung's market share of 15 percent.
The company also plans to sell smart phones in Indonesia, the Philippines and Viet Nam in the near future.
Lenovo will place a greater emphasis next year on increasing profits "rather than grabbing more market share," and aim to lift its pre-tax profit margin by at least 1 percentage point in three years, said Yang.
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