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Lenovo CEO Takes Aim At HP’s PC Lead

The boss of Lenovo has pledged to overtake Hewlett-Packard to become the world’s leading PC maker

On by Jeffrey Burt 1

Lenovo is basking in the news that it has overtaken Dell as the world’s second-largest PC vendor.

But now the China-based company is taking aim at the top spot occupied by Hewlett-Packard.

Gartner analysts said 12 October that Lenovo in the third quarter grabbed 13.5 percent of PC shipments worldwide, leap-frogging over Dell to become No. 2 behind HP in the sluggish market. During the third quarter in 2010, Lenovo ranked fourth, with 11.1 percent market share.

Not Satisfied

Gartner analysts attributed Lenovo’s surge to a new joint venture with NEC in Japan and the vendor’s aggressive marketing to both corporate and consumer PC markets.

However, Lenovo CEO Yuanqing Yang said he is not satisfied with the No. 2 spot. His goal is to grow Lenovo into the largest PC maker in the world. Yang isn’t giving a timeframe, but said in a statement that the combination of Lenovo’s aggressive marketing push – the company two quarters ago was in fourth place, trailing HP, Dell and Acer – and “current competitive environment positions the company as a strong challenger to ultimately become the global market leader.”

“We are growing in the enterprise and the consumer space – and our customers know we are fully committed to the PC market for the long-term,” Yang said, in an apparent dig at HP, which in August said it was planning to spin off its $41 billion (£26bn) PC business, but is now reconsidering the move under new CEO Meg Whitman.

“At the same time, we will continue to invest in innovative products that will help drive the convergence of technologies and services across all four screens – smartphones, tablets, PCs and smart TV. We must deliver a great user experience across all platforms to achieve our goal and become the leading personal technology company in the world. I believe we have the products, the team, the strategy and the momentum to achieve this long-term aspiration,” Yang said.

HP leads the market with 17.7 percent – that was up from 17.3 percent during the same quarter last year – according to Gartner’s numbers. Dell is in third with 11.6 percent, Acer is fourth with 10.6 percent and Asus rounds out the top five, with 6.2 percent.

In total, almost 91.8 million units were shipped in the third quarter, more than the 89 million that were shipped during the same period in 2010, Gartner said.

Volatile Market

Despite the bump in the numbers, the PC market is still a difficult and volatile place, according to Mikako Kitagawa, principal analyst at Gartner.

“The inventory buildup, which slowed growth the last four quarters, mostly cleared out during the third quarter of this year; however, the PC industry has been performing below normal seasonality,” Kitagawa said in a statement. “As expected, back-to-school PC sales were disappointing in mature markets, confirming that the consumer PC market continues to be weak. The popularity of non-PC devices, including media tablets, such as the iPad and smartphones, took consumers’ spending away from PCs.”

The sluggishness in the PC space – both Gartner and IDC in recent months downgraded their forecasts for the market for the rest of the year and into 2012 – also has vendors trying to adjust.

“As the PC market faced a slowdown, vendor consolidation has become a more apparent trend in the industry,” Kitagawa said. “Lenovo’s recent merger with NEC, and its acquisition of Medion, as well as HP’s announcement that it may spin off or sell its PC business, underlined this trend during the quarter.”

HP’s situation is the most fluid. In August, under then-CEO Leo Apotheker, HP announced it planned to spin off or sell its Personal Systems Group. Apotheker said he wanted HP to get out of the low-margin PC hardware business and instead focus more on becoming a larger enterprise software and services supplier.

HP Uncertainty

However, Apotheker was fired in September, and new CEO Whitman – formerly head of eBay – is hoping to make a final decision on the future of HP’s PC business this month. HP executives reportedly are reconsidering whether to keep it.

Lenovo executives aren’t the only ones who see an opportunity in HP’s unsettled situation. In an interview last month with a German daily newspaper, Walter Deppler, who heads up Acer’s European business, said HP’s back-and-forth has created confusion and concern among customers and openings for Acer.

“That is a major chance for us because big customers and resellers are uncertain. They are asking themselves: what’s next, who can I work with?” Deppler said. “We want to use this as an opportunity for us.”

Dell CEO Michael Dell also said he wouldn’t consider exiting the PC business. His company is undergoing a transition away from being a box maker to being a technology solutions provider. However, Dell said consumers and businesses alike continue to buy PCs, and PCs would continue to be an important part of his company’s future.

“There are a billion and a half PCs in the world, and while Gartner [analysts] change their estimates here and there, they also estimate there will be 2 billion PCs in the world by 2014,” Dell told the Financial Times. “When I look at that, I think the idea that the PC is no longer here is complete nonsense. You see PCs, tablets, you see smartphones. But those other devices aren’t necessarily replacing the PCs, so we are very committed to that part of the business, as part of this broader, end-to-end IT solutions company.”

Jeffrey Burt
Author: Jeffrey Burt
eWEEK USA 2014. Ziff Davis Enterprise Inc. All Rights Reserved.
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One reply to Lenovo CEO Takes Aim At HP’s PC Lead

  • On October 15, 2011 at 10:24 am by yeahright

    I’ve know Yuanqing Yang and despite having an immense ego that only emerging market companies that think they can take over the word can have, the actual practices they employ are downright illegal in any country that has any semblance of a legal system.

    Think Force Majeure, price fixing, anti-competitive practices, bribery, corruption and illegal access to cheap government funds to finance their business are all proven, but only a microcosm of what goes on.

    If you don’t know what you are talking about then don’t report.

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