Lenovo Posts Record-Breaking Quarter in 'PC Plus' Role

While the overall PC market fell 14 percent in the first months of the year, "PC Plus" leader Lenovo enjoyed a record-breaking quarter.

PC Plus era

Lenovo's marketing line says it's "for those who do," and during its fiscal 2013 third quarter, it did. Even as the global PC market crumbled, Lenovo posted a quarter packed with records.

The world's second-largest PC maker brought in record annual pre-tax income of $801 million and record annual sales of $34 billion, sold record PC shipments of 52.4 million units, and claimed a record global market share position of 15.5 percent.

Helping Lenovo was a growing interest in its tablets and smartphones, paired with cost reductions.

"Despite a challenging macroeconomic environment and ongoing PC industry transformation, Lenovo delivered a strong performance," said Chairman and CEO Yang Yuanqing.

"Smartphone shipments were 3.7 times greater than last year globally, and we are now number two in the China smartphone market," Yang continued. "This has laid a solid foundation for the successful transformation of Lenovo into a PC Plus leader."

Looking ahead, Yang said Lenovo would focus on the "fast-growing tablet, smartphone and enterprise hardware areas," while working to boost its PC sales performance.
"We are very confident in our ability to achieve success in these new areas, just as in the PC business," he said.

In January, Lenovo introduced six new smartphones, including the K900, a flagship device with a 5.5-inch 1080p HD touch-screen with 400 pixels per inch, a 13-megapixel camera, an Intel processor and a profile just 6.9mm thin. (For context, the Apple iPhone 5, with its 4-inch display, has a width of 7.6 mm.)

During the quarter in China—now the world's largest smartphone market—Lenovo's smartphone shipments grew 206 percent, while the overall market in China grew 117 percent.

Yang told The Wall Street Journal that Lenovo is this year targeting sales of 40 million to 45 million smartphones in China and 5 million to 10 million outside the country. He added that it also wants to be a "relevant global player" in storage and servers, though he wouldn't comment on whether talks were still under way to purchase IBM's server business.

Its PC sales were also strongest in China, where its market share rose 2 points to 32 percent, while in North America—a market that overall fell by 12 percent—Lenovo PC shipments increased by nearly 10 percent.

It's had particular luck in the U.S. with its Yoga and Twist consumer convertibles, it said, which took the "number one position, with nearly 50 percent market share."

Yang told the Journal, "In the long run, we are still optimistic [about the PC market]. We think that it is still a good market. ... It is a huge market that has profit potential."

According to research firm IDC, Lenovo was neck-and-neck with competitor Hewlett-Packard during the first-quarter of calendar year 2013. It reported that Lenovo's market share for the quarter was 15.3 percent, compared with HP's 15.7 percent, though Lenovo's worldwide growth was flat, while HP's year-on-year growth was down nearly 24 percent.

Overall, the PC market fell by 14 percent during the quarter, "its steepest decline ever in an single quarter," said IDC.