'Little' Apple, everyone's favorite 'boutique' tech design firm is suddenly swinging a very big stick in global tech sales. Lenovo, the former IBM PC division acquired by a cobbled together Chinese entity a few years ago to signal China's migration from cheap manufacturing platform to tech leader, suddently finds itself losing ground in its home market.
Now, there is an 'apples to apples' issue with regard to comparisons: Apple's figures include Hong Kong and Taiwan where Lenovo has never had the home advantage. But still. With more people having internet access than the US has citizens (and throw in all the illegals you want as well), Lenovo was supposed to be China's flagship tech company that built its bid for global dominance on that intimidating installed base.
Apple's success is owed to that devastating one-two punch of tangible functionality and intangible design. The Chinese market is voting with its wallet and the results favor the feisty outsider, not the home boys. JL
Robin Kwong reports in the Financial Times:
Apple’s sales in greater China have for the first time overtaken those of Lenovo, the world’s third-biggest personal computer maker by shipment volume, results from the two companies confirm.
Lenovo, which was the PC industry’s fastest-growing company for the seventh consecutive quarter, said on Thursday that its China sales rose 23.4 per cent from a year ago to $2.8bn. Strong demand for iPhones, iPads and Macintosh computers pushed Apple’s second-quarter sales in greater China, which includes Hong Kong and Taiwan, up sixfold from a year ago to $3.8bn.
Lenovo groups its Hong Kong and Taiwan sales separately from the mainland, under the ‘emerging markets’ category, which also saw strong growth over the past quarter. But for Lenovo to even match Apple’s revenue for greater China, analysts say it would have to have notched up sales in Hong Kong and Taiwan of at least $1bn.
Jenny Lai, head of Taiwan Research at HSBC, said Lenovo’s sales in those two markets “would not be enough to make up the $1bn gap.”
Nevertheless, the Chinese company remains one of the few bright spots in a global PC industry tarnished by lacklustre consumer demand in Europe and the US. Revenue in the second quarter rose 15 per cent to a record high of $5.9bn, while profits attributable to shareholders nearly doubled from a year ago to $108m.
Lenovo gained market share across all regions and last quarter overtook Acer to take the world number 3 spot, according to IDC.
Even in North America, Lenovo saw its shipments rise 30.8 per cent from a year ago against a 4 per cent decline in the overall market.
Liu Chuanzhi, Lenovo chairman, said the US market has “already become an important pillar of Lenovo’s profits”, compared to a $9m loss a year ago. “What a difference a year makes,” he said.
Lenovo declined to give any specific guidance on second-half shipments or sales, but Yuan Yuanqing, chief executive, said the company remains “optimistic” about the outlook for the rest of the year. He noted that “emerging markets, including China, continue to grow and outpace the [overall PC market]”, while in mature markets the corporate PC replacement cycle “remains strong and consistent”.
Lenovo also said it would begin to see contributions to its results in the next quarter from its acquisition of Germany’s Medion, and its joint venture in Japan with NEC.
Its optimism was in stark contrast to Dell, which earlier this week slashed its revenue forecast for the second half, citing delays in government spending and tepid consumer demand.
Investors appeared to side with Dell’s prognosis, sending Lenovo shares down 6.5 per cent in Hong Kong trading on Thursday.
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