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Lenovo faces chance to become rare PC maker successful in phones

Michael Kan | Feb. 3, 2014
The company's US$2.9 billion deal to buy Motorola Mobility from Google might end up paving the way for Lenovo to become one of the rare PC makers with a prominent handset business.

But despite Lenovo's success in China, the company's smartphone business needs to expand internationally in order to sustain growth, said CK Lu, an analyst with research firm Gartner. About 97 percent of all Lenovo's smartphone sales come from China, he said.

Lenovo's deal to buy Motorola Mobility may indicate the Chinese company is ready to make a big entrance in the U.S. market, but the acquisition is more about Lenovo acquiring patents to shield itself from lawsuits, should it bring its phones to other markets, Lu said.

"This is not about stepping into the U.S., but more about stepping out of China," he said. "This is really about getting the patents in the countries they want to be in."

Even with Motorola Mobility, Lenovo will probably face hurdles selling phones in the U.S., given that Apple and Samsung already dominate the market. In last year's third quarter, Motorola Mobility was ranked sixth in the U.S. smartphone market, with only a 3 percent share, according to Canalys.

But for consumers, a bigger Lenovo presence in smartphones means more Android devices on store shelves. In China, Lenovo phones range from the high-end, at over $500 to phones as cheap as $114 without carrier subsidies. One of its newest high-end handsets,the Vibe Z has a 2.2 GHz quad-core processor from Qualcomm, a 5.5-inch full HD screen, and has 4G support.

"This deal gives Lenovo a shot to be able to challenge Samsung for dominance of the Android ecosystem," Lu added.

Motorola Mobility, which only has 0.2 percent share of China's smartphone market, will probably do little to help Lenovo in its home nation. But in the U.S., the acquisition will give Lenovo some much needed brand recognition, said Nicole Peng, an analyst with research firm Canalys.

"People don't associate Lenovo so much with phones," she said. "But with Motorola, people automatically think of it as a phone brand."

 

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