News Column

Lenovo's global smartphone leap imminent

July 16, 2014

Molouk Y. Ba-Isa

Saudi Gazette

In 2004 when I wrote my first article on Lenovo, few in Saudi Arabia had ever heard of the company. There were plenty of naysayers at that time, assuring me that no local enterprise would buy computers from a China-headquartered manufacturer. Starting in 2011, it was very satisfying to see the frenzy of visits to Beijing by Saudi executives as they travelled to tour Lenovo's manufacturing facilities. Then came the large Saudi enterprise deals. Lenovo workstations, laptops and tablets are now well-established products in the Kingdom.

Last year I tested my first Lenovo smartphone. It was a bit strange and definitely not a contender with Samsung or Apple. But that's probably about to change. Consultancy firm Strategy Analytics' latest research on Lenovo's pending acquisition of Motorola Mobility from Google indicates that the merger could have a significant disruptive impact on the global smartphone market.

Using a proprietary methodology to measure disruption developed by the firm's Strategic Competitor Intelligence (SCI) program, the disruptive measure earned a score of 87 in one key category, hardware, indicating a level of potential disruption categorized in the "Hurricane" range, a classification reserved for events that present a serious potential disruptive impact to the market. SCI's methodology measures disruption on six dimensions, including User Proposition, Business Model, Geography, Technology, Partners, and Finance, and scores them on three dimensions including hardware, software, and ecosystem. 

"Lenovo might be seen as just another smartphone vendor among many operating mainly or totally in the Chinese market - but it grew from a similar position in PCs, using IBM's 'Think' brand to help take the world number one PC position recently," noted Richard Guppy, SCI Executive Director, Strategy Analytics. "I believe Lenovo is using that know-how to try a similar move in smartphones, with a potentially huge impact on market share and margins at a time when most vendors are already struggling for margin."

According to Guppy, the essential PC skills that made Lenovo a force were high volume, low margin branded device manufacturing and distribution which will be combined with Motorola's assets including mobile brand, intellectual property rights, technology, channels and products. Guppy found "remarkably little conflict from duplication and remarkably large synergy between the two."

Barry Gilbert, VP, Strategy Analytics added: "Lenovo is good at making smart acquisitions and at effectively integrating them - just consider IBM PCs and NEC's PC business in Japan - and so it stands every chance of unlocking its growth potential in smartphones using the formidable assets of Motorola Mobility."

Strategy Analytics, SCI Disruptive Alert argues that there are different phases in consumer electronics markets, and the current phase of the Android market is perfect for Lenovo to make its late, accelerated entry, leveraging the Motorola acquisition. There are still billions of people who haven't switched from feature phones to smartphones. Lenovo will certainly try to capture them as customers plus take market share from other competitors.

For more stories covering the world of technology, please see HispanicBusiness' Tech Channel

Source: Saudi Gazette, The

Story Tools Facebook Linkedin Twitter RSS Feed Email Alerts & Newsletters