Lenovo, the world’s largest PC maker, now sells more smartphones and tablets than computers. That milestone, which the company announced last week, underlines the growing influence of Chinese companies like Lenovo in the shift from desktop to mobile computing. Now even Lenovo, which acquired IBM’s PC business in 2005 and sells ThinkPad notebooks, is remaking itself for a post-PC era.
Lenovo said its sales of smartphones had more than doubled in the three months that ended June 30, to 11.4 million. The company also sold 1.5 million tablet computers. Executives said Lenovo had benefited from a structural shift in the smartphone business, where the high-end, dominated by Apple and Samsung Electronics, is showing signs of saturation. Sales of less expensive handsets made by Lenovo and other Chinese companies, like Huawei and ZTE, are growing more rapidly. “The recent change in the market favors Lenovo and our business model,” Yang Yuanqing, chief executive of Lenovo, said in a conference call with analysts. “The market is shifting from the premium part to the mainstream. It is shifting from the mature markets to the emerging markets.”
Lenovo was the fourth-largest maker of smartphones worldwide in the second quarter, according to IDC, a research firm, with a market share of 4.7%, up from 3.1% a year earlier. The company’s smartphone business
relies heavily on China, which accounts for about 80% of sales, but Lenovo is trying to expand its global presence.
Lenovo executives declined to comment on speculation about a possible bid for BlackBerry, which has put itself up for sale. But Lenovo made it clear that it did not plan to rely on internal, or “organic,” growth alone. “Given its solid financial position, the group will continue to actively look for inorganic growth opportunities which will supplement its organic growth strategy to accelerate future expansion,” Lenovo said in its latest quarterly earnings report.
Analysts say acquisitions might be a way for Lenovo to
address some of the shortcomings of its smartphone arm,
including the low prices that its devices command – an average of less than $100 in China, while devices like Apple’s iPhone 5 and Samsung’s Galaxy S4 cost more than $700 in that country.
Because of the low prices, Lenovo’s smartphone and tablet arm generated only 14% of the company’s revenue in the most recent quarter. The company remains heavily reliant on its PC division for sales and earnings, even though that business is shrinking.