The world's second largest PC producer by shipments now plans to compete with Apple and Samsung. Provided to China Daily

As era of desktop computers fades away, company seeks profits from other products

Lenovo Group is eyeing the high-end mobile market and plans to make it generate profits in the post-personal computer era.

The world's second largest PC maker by shipments has speeded up its efforts to become a strong consumer electronics company to compete with Apple Inc and Samsung Electronics Co.

"Lenovo will become the No 1 smartphone vendor within China in two years," says Liu Jun, senior vice-president of Lenovo and head of the company's PC, smartphone and tablet businesses.

Turnover in Lenovo's smartphone business is projected to make up more than 15 percent of the company's total by the end of this year, he says.

On May 16, the Beijing-based manufacturer released its latest smartphone, the K900. Selling at 3,299 yuan ($538; 416 euros), the company hopes the new device will attract customers from Samsung's Galaxy Note series and Apple's iPhone 5.

Lenovo hopes to sell 1 milliion of the new devices in China, saying the market needs new gadgets to break Apple and Samsung's domination of the high-end market.

High-end customers in China need more options and Lenovo is poised to fulfill that demand, Liu says.

Smartphones priced above 3,000 yuan are categorized as high-end products. They account for 10 to 15 percent of market share in China, says Chen Wenhui, Lenovo's vice-president and head of its mobile business.

During the first quarter of this year, Lenovo's China market share lagged behind Samsung, Nokia Corp and Apple because the company's smartphones did not get much market attention until last year, the report says.

Samsung took nearly a quarter of the nation's market share while the declining Nokia managed 15 percent. Accused of being slow to release the latest iPhone and of having a poorer warranty than in other countries, Apple grabbed about 13 percent of the market share in China, says iiMedia Research.

Although overseas brands took more market share and sell more high-end devices in the country, there is "a strong momentum" for local brands to take market share from overseas vendors in the coming quarters, added the research company.

Lenovo was the top local smartphone maker in terms of market share.

Lenovo's "attack" strategy in the mobile market comes in the middle of a recession in the PC industry.

United States research company IDC warned this year that international PC shipments are poised to suffer a double-digit slump in the second quarter of this year.

Global PC makers are eagerly seeking new profit streams to replace the decades-old PC business. How to prepare for the inevitable decline in the PC sector is the most discussed topic among top vendors.

The world's largest PC manufacturer, Hewlett-Packard Co, is trying hard to turn itself into a software and service company.

Dell Inc, the third largest, also hopes its 1-year-old software group can bring the company at least $2 billion (1.6 billion euros) in three years.

Nonetheless, Lenovo has decided to stick to hardware manufacturing but is turning to consumer electronics and the corporate server sector for higher profit margins.

Last year, the Chinese company joined hands with US data-storage company EMC Corp to set up a joint venture selling servers in the Chinese market. Lenovo also tried to acquire IBM's server unit in April but did not succeed.

Analysts say compared with the server business, which requires more time and energy to attract customers, the consumer market is a much easier way to generate revenue in the short term.

Day's before Lenovo released its new smartphone, company executives set another target for the consumer business: selling 100 million terminals - including smartphones and tablets - before the end of this year.

gaoyuan@chinadaily.com.cn

(China Daily European Weekly 05/31/2013 page22)