Lenovo is the largest PC maker in the world. With the snapped up of US telecom firm Motorola Mobility for $2.91 billion and IBM’s low-end server business for $2.3 billion, Lenovo will become the number three smartphone player in the world. Recently, it announced plans to sell its range of smartphones during Q1 in Nigeria and later in the year in Ghana and Ivory Coast. In this interaction with IT Edge News, MOSHOOD ABUBAKAR, the General Manager, GRAHAM BRAUM, talks about Lenovo’s plans for Nigerians.
Lenovo is the number one global PC manufacturer, shipping 12.6 million units in the second quarter of 2013 in the midst of stiff competition from HP, Dell and Apple, how did you manage to achieve this feat?
Firstly, I would like to point out that on February 13, 2014, we announced our Q3 2013/2014 results and Lenovo quarterly revenue was US$10.8 billion, a 15 percent increase year-over-year, passing the US$10 billion milestone for the first time ever. Third quarter profit grew even faster with pre-tax income increasing 30 percent year-over-year to US$321 million, while earnings also grew 30 percent year-over-year to US$265 million. Lenovo shipped a record 32.6 million devices in the quarter or nearly 5 devices every second. Lenovo’s third quarter mix of sales from its Mobile Internet and Digital Home division, which develops PC Plus products such as smartphones, tablets and smart TVs, was 16 percent of total revenues, up from 11 percent one year ago and seven percent two years ago, with steadily improving profitability.
Our success is the result of our ‘Protect and Attack’ strategy which we rolled out in 2009. Lenovo’s Protect and Attack strategy sees us protecting our core strengths, such as China and global commercial PCs, while simultaneously attacking new high-growth opportunities, such as emerging, global consumer and mobile markets. It is one of the factors that has made us a strong challenger in the market, allowing us to realize our long-time goal of becoming the global market leader in PCs, while expanding our product portfolio to include tablets, smartphones, smart TVs, other “smart connected devices” and the broader portfolio of cloud, services and infrastructure hardware, such as storage and servers that are critical to powering the PC Plus era. An important part of “protect and attack” is balance: balance between emerging and mature markets; balance between leading innovation in PCs and developing new PC Plus products; as well as balance between commercial and consumer customer groups.
Our emerging markets business has shown strong growth and is also moving to a more profitable model. Our strategy there is clear: In markets where we have a relatively small share, we focus on driving growth to achieve a relevant position of at least 10% share. In markets where we have 10% share, we begin to focus on profitability as well as growing to leadership. Example: India and Russia, above 10% market share. In markets where we are already in a leading position (Top 3, 20 %+) we are focused on driving greater profitability.
The financial results driven since Protect & Attack was rolled out in 2009 speak for themselves, doubling our revenue from $15 to $34 billion and our market share from 7.2% to 18.6%, while boosting of profits to US$ 635mln in FY 2012/13 from a loss of US$ 192mln in FY 2008/2009
Lenovo is transitioning to become a leader in what we call the PC Plus era. Lenovo sees a “PC Plus Evolution” not a “Post-PC Revolution” in which the PC remains central to the digital lives of millions of people and businesses as well as at the heart of an ecosystem of tablets, smart phones and smart TVs and includes all major operating systems, chipsets, apps and cloud-delivered services. For a third straight quarter, Lenovo’s combined shipments of smartphones and tablets – 17.3 million devices, surpassed the 15.3 million PCs it sold. It also continued to be the world’s fourth largest smartphone supplier with 4.8 percent share, growing shipments 47 percent year-over-year, driven by excellent performance of its smartphone launches in a number of new markets. In tablets, Lenovo had a record high of 3.4 million shipments, up over 300 percent year-over-year. Tablet strength was driven by the launch of the Yoga Tablet, the world’s first multimode tablet. Together, these results clearly illustrate Lenovo’s PC Plus transformation.
Lenovo has developed a core competence in managing acquisitions globally, should we expect the acquisitions and merger of popular brands to increase its level of dominance in Africa?
Lenovo does not comment on future acquisitions, marketplace rumours and speculation. That said, Lenovo has a core competitive advantage in managing mergers and acquisitions. Our expertise in M&A enables Lenovo to continue to gain market share and expand margins despite a challenging economic environment.
As Lenovo debuts in Nigeria, why Nigeria?
Smartphone penetration in Nigeria is one of the highest in the world and our goal is to be one of the top five smartphone vendors in Nigeria in the very near future. We believe this a reality as our product range caters to a wide variety of individual needs and we have partnered with the best in the industry to help us achieve our goal. With more than 120 million mobile subscribers, Nigeria represents a strategic market for Lenovo’s smartphone business. Smartphones are fast becoming a primary platform for work, entertainment and social networking for consumers and we are thrilled to announce the launch of our exciting line-up in Nigeria. Innovation is in Lenovo’s DNA. Our team strives to deliver groundbreaking devices with distinct, elegant design. The launch marks the first time customers in Nigeria can purchase Lenovo smartphones locally and we are excited to see the market’s reaction.
What range of products will Lenovo offer the Nigerian market and what market segment are you targeting?
The range includes entry-level devices, such as the A369i, A516, A680, and A859, the stylish S650 and S930 and the picture perfect and sleek Vibe X. All Lenovo smartphones will come with a one year local warranty. We are targeting all segments with our portfolio, from feature phone users planning to switch to their first smartphone to experienced users who use their phones for business or social media or multimedia or gaming.
In terms of innovations what competitive edge does Lenovo have over popular brands like Samsung, Blackberry, Nokia, Apple and Tecno and the rest?
Lenovo smartphones are designed with specific customer needs in mind. The portfolio offers a range of carefully considered design innovations and functionality that fits every style, personality and need. We are now launching 7 different devices in the market and we will be adding more devices in the near future.
Do you feel threaten with the increasing growth of the mobile device grey market in Nigeria?
Lenovo is extremely focused on developing its business and its distribution and retail channels in the country. We are laser-focused on providing exceptional after sales service; value added propositions and product availability at the same time as other markets. We believe this approach will help us to articulate the benefits for local consumers with regards to official in-country products.