World's #1 PC Vendor Sells More Tablets, Phones Than PCs

Now here's an interesting twist: Lenovo is ranked as the #1 PC vendor worldwide, beating out rivals HP, Dell, Asus and Acer. Yet during its fiscal first quarter ending June 30, the company sold more smartphones and tablets than it did desktops for the first time ever. That's partially due to Lenovo's presence in China where its smartphone business has grown 121 percent year-over-year, making it the second largest smartphone vendor in China and the fourth largest vendor worldwide.

"While driving profitable growth in our core PC business, we are rapidly transforming our company into a PC Plus company," said Yang Yuanqing, chairman and CEO of Lenovo. "The PC Plus market requires fast, efficient innovation as it moves quickly from premium products to mainstream ones and from mature market domination to emerging market hyper growth.  This kind of market plays to Lenovo’s proven strengths.  Lenovo is now better positioned than our competition to take advantage of these clear trends."

Lenovo said that during its fiscal first quarter, laptops were the largest contributor to the company's revenue worldwide, generating 52 percent even though laptop shipments were down 12.9 percent year-over-year across the industry. This business brought in $4.5 billion USD, an increase of 4.7 percent year-over-year, and achieved a 17.3 percent market share. Products released during that quarter included the ThinkPad T431s, the Yoga 11s, and the Yoga 13.

Lenovo said its desktop PC business growth remained flat worldwide year-over-year even though the desktop industry has declined 9.4 percent year-over-year across the industry. This business generated $2.5 billion, or 28 percent of the company's total revenue, but decreased 2.8 percent year-over-year while achieving a 16 percent market share. Products launched during this quarter included the Horizon Table PC, a 27 inch AIO desktop which can be laid flat and used like a huge multi-user tablet.

The company said its Mobile Internet Digital Home (MIDH) business, which includes tablets and smartphones, saw a sales increase of 105 percent year-over-year, generating $1.2 billion and 14 percent of the company's total revenue in the first fiscal quarter. The company specifically pointed out its growth in China during the quarter, reporting that smartphone shipments jumped 121 percent year-over-year. Tablet shipments grew more than three times year-over-year, propelled by the ThinkPad Tablet 2, the 7 inch A1000 and A3000 models, and the 10 inch A6000.

Just recently Yuanqing told the Wall Street Journal in a phone interview that if a company can't drive growth, then it should pay more attention to margins. Thus, the sales team was tasked to push more high-end products even though the overall PC market is declining. The result was that the company's PC business managed to increase its revenue while shipments declined worldwide.

"Our average selling price improved, not just in China but world-wide," he said. "Fortunately, we had already launched some attractive high-end products, like the IdeaPad Yoga and the ThinkPad Helix as well as ThinkPad X1 Carbon. They helped raise average selling prices. We have very disciplined cost management, and that has also helped us improve profitability."

He also admitted that the company's smartphone business is not a profit engine -- yet. It's already become profitable in China, but it's still in a developmental phase. The company is currently working to become a market leader in that region by investing in branding, sales channels and product development. Because of this, there is little net profit. Outside China, the smartphone business is still developing.

"But our tablet business is already profitable worldwide," he said. "We leverage our PC sales channels to sell tablets. With tablets, we can take advantage of our leadership position in the PC market."

  • Parsian
    I still like to buy the Lenovo Intel powered smart phone.
  • anti-painkilla
    While I get that there is little need for an article on only Chinese sold phones. Can we have one? Would be interesting to see what specs their phones have. I am sure Lenovo is not the only one that only supplies to the Chinese market.
  • back_by_demand
    "We leverage our PC sales channels to sell tablets"

    This. Exactly what HP and Dell should be doing, using their dominant positions selling into the corporate workplace to flood their sectors with tablets, not toy Android or iPad, but workplace Windows tablets with a high value and profit margin - HP has gone AWOL on its Wintel background and Dell can't do anything whilst that buttmunch Icahn is screwing with Mike Dell's plans - this is where the Chinese start taking over, not because their products are better but because our companies have lost touch
  • 10tacle
    Death to all creators of spambots. Should be an international law and worldwide bounties given for these POSs to hunt 'em all down and exterminate them like plague-carrying rats. I'd sign up yesterday.

    Anyway back to this article: I'm seriously concerned about the long term prospects of desktop PCs in general. Having built my own gaming rigs for nearly 20 years, the way things are going towards the future - short attention span kids growing up with tablets, laptops, smart phones, and console gaming - I don't see the next generation even being interested in desktop PCs.
  • runswindows95
    Considering that most people only want a device for Facebook / email, I can see this to be a trend. Why boot up a huge desktop when a tablet can do what they need to do? I do way too much typing to not have a desktop.
  • ddpruitt
    the company sold more smartphones and tablets than it did desktops for the first time ever

    Not a particular useful statement, given that these are different type of devices. I get phones more often than PCs, so by lumping them in with tablets it makes it look like tablets are outselling PCs. They're basically trying to provide us with a self fulfilling prophecy.
  • greghome
    I Lulz at the Americans for not being able to get their hands on a Lenovo K900.
    They're available here all over Asia....... Wakakaka.
  • iam2thecrowe
    That's strange, I didn't even know they even made smartphones or tablets???? when will this filter through to Australia? I do know the company i work for (Cxxxx) is going to be acquiring new Lenovo laptops (and were finally going to be moving on from XP! hoorah!), but we still have Blackberry's for out phones, which do their job i suppose. They are great for email and documents....and being locked down to the MAX!
  • ojas
    I can see that smartphone and tablet sales grew more than laptops and desktops, but i don't see the volumes mentioned?

    And what's the point of selling more if you're not making profit?
  • rwinches
    Lenovo’s seven-inch tablets, the A1000 1.2 dual core 1024x600and A3000 1.2 quad core 1024x600, as well as the ten-inch A6000 1.2 quad core 1280x800.
    These tablets run Android OS. Jelly Bean