Lenovo bets on new products

08 May 2012

BEIJING: Lenovo, the Chinese IT group, is aiming to greatly expand its portfolio, targeting categories like smartphones and tablets as a means of offsetting a moderation in demand for personal computers.

The firm plans to open a new R&D base in Wuhan, to be operational by October 2013, and charged with creating a wide range of original products, including wireless devices and PCs, its current core business.

More specifically, the organisation is "accelerating development" in smartphones, tablets and other mobile internet devices, said Yang Yuanqing, its chief executive, with apps also now becoming the subject of heightened emphasis.

"We are aggressively moving forward into the 'PC Plus' era," he added. "We're determined to firmly seize the tremendous opportunities for innovation in this market."

As part of the broader goal to establish an "end-to-end product capability", the Wuhan site is also tasked with cutting innovation lead times, optimising Lenovo's supply chain and strengthening its in-house marketing systems.

Overall, the company will invest RMB5bn in this R&D centre in the coming five years. It expects the revenues yielded from its activities to hit RMB10bn in 2014 and RMB50bn in the next five years.

Figures from IDC, the insights provider, showed that Lenovo's worldwide PC shipments rose by 44% in the first quarter of 2012, a 13.4% market share.

This could be compared with a 3.2% uptick recorded by Hewlett-Packard, the category leader, which claimed an 18% share. However, the entire sector saw a modest 2.3% increase, partly due to competition from tablets.

When discussing smartphones, Lenovo held 9.1% of the Chinese market in the final quarter of 2011, measured against some 1.8% in the preceding three months, making it the fifth largest player, also according to IDC.

"Lenovo's building of the R&D centre seems to indicate they are serious about this market," said Teck Zhung Wong, an IDC analyst. "Once they have success in China, this can make their expansion into other markets smoother."

Turning to tablets, Lenovo took a 1.6% share of shipments in the final quarter of last year, versus 54.7% for Apple, although the former company's slates were available in a limited number of nations outside China.

In further demonstration of a commitment to enhancing its portfolio, Lenovo launched a Mobile Internet Digital group in 2011, focusing on wireless devices and smart TV sets that can connect to such gadgets, and to the web.

Data sourced from Lenovo, Wall Street Journal, PC World; additional content by Warc staff