Lenovo wants to own hardware market

IBM may be exiting the hardware business. Dell and HP would like to  move their focus from shifting boxes to selling software and services.

Lenovo on the other hand is steadily building up a head of steam to dominate computer hardware.

The company has been around since the 1980s. Things really took off in 2005 when Lenovo purchased IBM’s PC business. It still makes the iconic ThinkPad laptops.

Lenovo – world’s largest PC business

Last year Lenovo became the world’s largest PC maker – at least in terms of unit sales – ahead of HP, Dell, Acer and Asus.

The company has revenues of more than US$30 billion and, unlike some other PC makers, is profitable. In 2012 it posted a net income of around US$500 million.

I can’t think of another recent major PC industry acquisition as successful as Lenovo take over of the IBM PC business. The Chinese owners had the sense to leave the ex-IBM engineers and managers get on with doing what they do well, while providing the financial and logistical support needed to succeed.

Servers, phones

2014 has barely begun, yet already this year Lenovo has moved to buy IBM’s low-end Intel-based server operation and pay Google almost $3 billion for the Motorola phone business.

Both acquisitions are huge.  They represent huge risks. IBM wanted to exit low-end servers at least partly because the margins aren’t great. Google’s reasons for selling Motorola are probably more strategic – owning a handset maker conflicts with its Android strategy.

And then there’s the whole painful matter of integrating cultures – although as we’ve seen with the IBM PC business, Lenovo is rather good at that.

Industry domination?

Lenovo is on a trajectory towards dominating technology hardware. Today it is still a distance behind Apple or Samsung, but it represents a clear challenger. It has strong management and first-rate research and development. The operational side of the business is second to none.

The company was already building a head of steam in the phone business – although that was mainly in China. Buying Motorola propels Lenovo to become the number three handset maker worldwide. The IBM server deal cements Lenovo firmly in business markets – that will help sell its branded PCs and phones to corporate customers.

It’s already time for us acknowledge Lenovo as a third hardware giant alongside Apple and Samsung. It is a company worth watching.

6 thoughts on “Lenovo wants to own hardware market

  1. I can’t say I’ve ever used a Lenovo laptop. I know they’re out there as the Thinkpad but they have no mindshare with me. My advice has always been Acer for good price/performance, Sony for quality hardware. Recently I’ve added Samsung on the low end and Asus on the high.

    There is only one thing not letting me recommend Android tablets instead of laptops and that is TVNZ OnDemand, those expletives.

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    • I had a ThinkPad – one of the last IBM models. We liked it so much I bought one for Mrs B, by then it was a Lenovo and a very nice laptop indeed, we still have it and although feeble by today’s standards, still functions. ThinkPads always had good build quality and a few business-security features that meant it was worth paying a small premium. I’d certainly consider buying another one.

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      • My Uncle has a Thinkpad for his work laptop. It’s ancient and runs oh so slow but hardware-wise it’s stood the test of time. I just never remember them, if someone asked me what brands of laptops there are it’d never come up.

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