Smartphones are not an entirely new market for Lenovo, however the company does consider them a new opportunity. In fact, Lenovo Chief Executive Yang Yuanqing recently spoke about how you always have to consider how to grow when you are a public company and that smartphones could be their "new opportunity." Basically, it is looking like Lenovo has plans to extend their smartphone business into the US as well as Europe.
At present, Lenovo smartphones are available in China and have recently begun appearing in emerging markets such as India, Indonesia and Russia. According to IDC data, Lenovo is currently sitting in the number two position in China. This has them sitting behind Samsung with 11 percent of the share. Samsung on the other hand has 17 percent of the smartphone market share in China with the remaining top five coming in as Apple, ZTE and Huawei.
Shifting away from China and into other markets will take some work though. Lenovo appears to be understanding of that and have acknowledged their smartphone market share outside of China is "still tiny" and that this is "just a start" for them. They have yet to detail a full set of plans in terms of how they will make this all happen, however Lenovo has mentioned the bit about the US market being run by the carriers and subsidies and have even touched on the possibility of acquisitions to make this all happen.
Looking forward Lenovo has plans to increase smartphone sales to 50 million for the current fiscal year. The previous fiscal year closed in March and had Lenovo with 30 million in terms of smartphone sales. With that in mind, further details coming from Mr. Yang touch on how the smartphone side will not be a major source of profit in the short term. Instead the company is looking for smartphone success in the long term.
Some of the initial issues around profitability will deal with marketing and other expenses that will be needed to expand outside China. Otherwise, for now, while the smartphone business if profitable for Lenovo in China, that profit is described as being "not big." The other side to this story comes in with the phones, while we are expecting Lenovo to use Android, they have yet to say much about the devices.
SOURCE: Wall Street Journal