Lenovo rises as mobile, data server player

Updated: 2013-11-08 10:21


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It began making smartphones in 2010. The 4.7 percent share of the global smartphone market it claimed in the quarter ended September, according to IDC data, means only Apple Inc, Samsung Electronics and Huawei Technologies are bigger.

"We definitely have a plan to grow organically but at the same time we have our eyes open for all opportunities available in the market, and have ourselves well prepared," Wong Wai Ming, Lenovo's chief financial officer, said in a post-earnings call.

"It's not just servers, I think for any business, we have the capability to look at opportunities and will definitely do so as and when it adds value to us," Wong said.

Server Ambitions

Lenovo also wants to repeat its penetration of the smartphone business in cloud computing, which Amazon Web Services pioneered in 2006.

The technology lets companies rent computing power, storage and other services from data centers shared with other customers - typically cheaper and more flexible than maintaining their own.

The ambitious company was among a range of suitors to approach BlackBerry Ltd before the troubled device maker took itself off the market, according to sources familiar with the matter. BlackBerry, with its pedigree in data and the smartphone business, was a potential match for Lenovo's expansion needs.

Any potential deals, unlike the reported interest in BlackBerry, are likely to match Lenovo's previous pattern of low-key deal-making. This year's acquisition of Brazil's CCE and Indianapolis-based Stoneware in 2012 provide examples, said Alberto Moel, a Hong Kong-based analyst at Sanford C. Bernstein.

"They're under the radar, doing deals that suit their strategy, paying as little as possible, applying their product portfolio and capabilities and monetising that," said Moel, speaking before Thursday's earnings were released.

"These are small deals, that they can pay for in cash, to meet the needs of a particular geographic coverage or particular product. On the server side they'll be looking for corporate server capabilities - there are some smaller companies in the server business that could be a good fit."

The company, based in both Beijing and Morrisville, North Carolina, already works with EMC Corp, the world's largest data storage equipment maker, in developing servers and storage products.

But for Lenovo this isn't enough. The firm is now actively seeking a way to build its small server business as it spins away from a PC market that IDC predicts will continue to shrink, declining 2 percent next year.

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