Smartphones and tablets -- PC giant Lenovo's next frontier

Thu Nov 8, 2012 5:17am EST
 
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By Lee Chyen Yee

HONG KONG (Reuters) - Lenovo is on track to become the world's No.1 PC maker, but with traditional PCs going out of vogue with consumers, the Chinese company is pinning future growth hopes on smartphones and tablets, a segment dominated by Apple and Samsung Electronics.

The Thinkpad maker has successfully grabbed market share from rivals such as Dell Inc and Acer Inc. Technology research firm Gartner says it has already overtaken market leader Hewlett Packard Co in PC shipments and rival research firm IDC ranks it a close second.

However, with the traditional PC sector's long-term future uncertain, Lenovo has forayed recently into the mobile computing business and is ploughing resources there.

Reflecting that push, the company reported on Thursday a 12.6 percent rise in quarterly net profit to $162 million, its slowest profit growth in more than two years, though it beat the $156.3 million consensus forecast of analysts.

"Obviously their cash cow is still going to be PCs, so they will use their PC business to expand into tablets and smartphones," said Jonathan Ng, an analyst with CIMB in Singapore.

In the six months to September, Lenovo's PC revenues accounted for nearly 90 percent of total revenues of $16.7 billion and grew 14 percent.

Revenues at its mobile Internet and digital home division more than doubled to $1.3 billion in the same period, mainly due to consumers snapping up its smartphones in China, the world's largest mobile phone market.

Lenovo has been adept at capturing market share in the PC sector, claiming the No.1 spot in markets such as China, India, Germany, Japan and Russia.   Continued...

 
A LePhone is on display during a news conference in Hong Kong May 26, 2011. REUTERS/Tyrone Siu