Lenovo 'Protect and Attack' Strategy Paying Off
Lenovo, the world's No. 2 PC maker, saw record sales of $8.4 billion during its fiscal 2011 third quarter, which concluded Dec. 31. Growing faster than its top-five ranking peers, it additionally enjoyed global market share of 14 percentits highest ever.
Lenovo, which announced its quarterly results Feb. 9, has been executing a "protect and attack" strategyprotect its enterprise business and strong base in China, and attack growing segments such as smartphones and tablets. Handily, it helped Lenovo outsell the industry averageLenovo PC shipments increased 37 percent, the company said in a statement, while the overall industry struggled to remain flatand to work around hard-drive shortages that are hurting competitors.
Analysts with investment firm Jefferies & Company wrote that third-quarter "revenue and income came in better than market expectations." Revenue, they added, was driven by strong consumer PC growth of 71 percent year-over-year, while Lenovo's commercial PC segment grew 21 percent year-over-year.
On. Jan. 13, Gartner reported that Lenovo had sold nearly 13 million PCs during the quarterup from 10.5 million a year earlierand "further cemented its place as the No. 2 vendor in global PC shipments."
During the quarter, its laptop business brought in sales of $4.5 billionan increase of 30 percent year-over-yeargenerating 43 percent of its total sales revenue.
Its growing smartphone divisionwhich saw shipments increase "20 times year-over-year for the quarter"also significantly contributed.
"We saw strong progress in our Mobile Internet business. During the quarter, Lenovo sold more than 6.5 million phones, and almost half were smartphones," Lenovo Chairman and CEO Yang Yuanqing said in a statement. "Lenovo's smartphone market share in China reached double-digit market share in December. We also see strong momentum in our tablet business. All these successes demonstrate that Lenovo has built a strong foundation for the next steps beyond traditional PCs."
In China, Lenovo is the No. 2 tablet vendor, and during the third quarter grew its overall market share to a record-high 35.3 percent.
"In the largest PC market in the world, Lenovo widened the share gap between itself and the company's main competitors," according to a company statement, "and continued to outperform the China market, particularly in emerging cities and amongst rural customers."
Apple, Nokia and other top brands have aggressive plans for China, noting the unprecedented pace at which its middle class is growing and their appetite for mobile electronics. With such fast-paced growth, a few cultural stumbles along the way seem likely, and it will be interesting to see how the China-based Lenovo can put its home advantage to use.
The writer Chuck Salter, in
a Fast Company
article, recently summed up Lenovo by describing it as a company unlike anything we've ever seen before, a product of Communist China, influenced by the West, and with customers in 160 countries. He writes:
In just 30 years, an enterprise launched in the Beijing equivalent of a garage ... has blossomed at a pace no one predicted. Lenovo is redefining "Made in China," producing the industry's highest-quality machines; it ranked No. 1 in the 2011 Computer Reliability Report, ahead of Apple and HP. And the company's culture skillfully blends an Eastern way of thinking with the best of Western business, demonstrating innovation and nimbleness that would impressand unnervethe most skeptical Silicon Valley digerati.