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Lenovo faces uphill battle in U.S. smartphone market

Christopher Null | May 29, 2013
Can the brand behind ThinkPad crack the Apple/Samsung duopoly?

ThinkPad loyalists may be in for a real treat soon: The current owner of the brand says it wants to bring Lenovo-brand smartphones to the U.S.within a year.

It's not as wild an idea as it may seem to those who don't follow the company closely. American consumers are no doubt accustomed to hearing reports that "Computer company X is getting into mobile," a frequent refrain throughout the 2000s.

Most of those endeavors (Apple being the exception) ended disastrously: Dell and Hewlett-Packard's appallingly misguided attempts to build cell phones (sometimes on more than one occasion) have surely soured many a potential phone buyer on the prospects of a big computer maker trying to reinvent itself in a world where mobile rules.

But Lenovo isn't jumping into smartphones untested like its forebears did. The Chinese giant has been selling phones overseas for several years. In China, its market share now puts it in second place behind Samsung, having jumped from 4.1 percent share of the business in 2011 to 11 percent in 2012. Apple has now fallen to third in China, at 9.8 percent.

Last year Lenovo began expanding outside its homeland, but only in emerging markets. Lenovo has yet to enter western Europe, for example.

Meanwhile, while most PC manufacturers are retrenching, Lenovo's business is going gangbusters--and it may soon become the largest computer manufacturer in the world when it overtakes HP.

This all sounds like good business decision making, but whether the folks behind ThinkPad can really muscle their way into the American market is an open-- and interesting--question.

Working against them is the incredibly heated and combative U.S. cell phone market. Densely saturated (anyone who needs a phone today already has one, and possibly two or three), there's no "low-hanging fruit" in the U.S. to go after. Market share will have to be obtained directly from someone who already has it. Today that really amounts to two companies: Apple and Samsung together control over 60 percent of the smartphone market, leaving HTC, Motorola, and LG to fight over the scraps. It's incredibly difficult to imagine an upstart entrant like Lenovo--no matter how popular it is overseas--turning this into a three-horse race.

On the other hand, Lenovo has a loyal following that is probably rivaled only by Apple. Will the ThinkPad faithful agree to jump ship? It will of course come down to what the hardware can do. In Asia, Lenovo phones have gotten decent marks from reviewers. Writeups call current hardware solid but bulky and nondescript, clearly designed for the boardroom over the club--all descriptors that are often leveled at ThinkPad laptops, too.

 

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