Can Lenovo Dominate In The Struggling PC Market?

Yasir is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

The PC market has been slowly declining in this era of powerful smartphones and tablets. Worldwide unit shipments in Q4 fell to around 90 million, which showed about a 5% decrease compared to the year before. Shipments fell around 2% in the U.S; however, tech sector analyst Canalys believes that the PC market is booming.

The reason for this "boom" is that tablets have also been included in the PC market, as the market for tablets has grown significantly. While the tablet market is growing, PC giants, including Dell (NASDAQ: DELL) and HP (NYSE: HPQ), find themselves struggling. Dell has decided to go private, and rumors suggest that HP may be considering a breakup.

Lenovo (NASDAQOTH: LNVGY), on the other hand, showed nearly 10% growth in PC shipments with more than 1.4 million units. Even after aquiring IBM's Thinkpad line, Lenovo has never been a dominant force in the PC industry against HP and Dell. However, 2013 might just be the year when Lenovo gets on top. After having a successful year in terms of the PC market share, Lenovo has expanded into smartphones and tablets.

How Lenovo can dominate in 2013

Previously, Lenovo was seen as a brand for low-end laptops at cheap prices. However, the company has now switched to high-end tablets and PCs, with Windows 8 being a key factor. Microsoft's Windows 8 has not been doing well, although the concept is fantastic and the OS offers a variety of new features.

Windows 8 is meant to be used for touch-screen monitors, tablets, and laptops. Lenovo, along with HP and Dell, has entered into a new "Convertibles" or "Hybrid" market. Basically, these new Windows 8 devices are touchscreen tablets which can transform into powerful notebooks.

Lenovo has released some fantastic Windows 8 convertibles, including the Thinkpad Twist, the IdeaTab Lynx, and the Yoga 13, which is possibly one of the best notebooks/tablets of 2013. Lenovo's CEO, Yuanqing Yang, believes that innovation is the key to success in the new Windows 8 market and Lenovo's Ideapad Yoga 13 is definitely the product which stands out in the market.

While Lenovo has released, possibly the best Windows 8 devices for 2013; HP and Dell have also created products with touch-screens, for better user experience on Windows 8. HP recently released the Envy X2 convertible and the new HP touch-smart sleekbook will hit stores by the end of February. Dell has also released 2 new Windows-8 hybrids, including the XPS 12 and the Tablet 10. However, things are only looking good for Lenovo at the moment, as the company plans to increase shipments worldwide. Dell and HP, meanwhile, face lower growth in the PC market and look to improve shipments with the new Windows 8 devices.

Growth In Other Areas

While showing strong figures in the "PC Plus" Era, Lenovo is also expanding into the smartphones and tablets business. While HP and Dell are struggling in the PC market, there are only few signs of growth and expansion. On the other hand, Lenovo is already improving its smartphones business, as the company showed profits in China's smartphone segment.

Also, Lenovo has already launched its smartphones, and both Android and Windows 8 tablets, in several different countries around the world, including India and Russia. Yuanqing believes that Lenovo has showed significant growth in the PC market,  but also "hypergrowth" in the tablets and smartphones segment.

Lenovo's senior VP and ex-Acer president, Gianfranco Lanci, believes that Lenovo is heading in the right direction, and believes that the company's 2% to 2.5% profit margin is a success in the PC market. Lanci also said that the company is aiming for a 1% to 1.5% increase of profit margins in 2014.

Bottom Line

Lenovo not only believes that it will have a successful year in the PC market, but also believes that the company will grow further in the mobile phones and tablets industry. We have just entered into the "PC Plus" or "Tablet+Laptop" era, and Lenovo is likely to come out on top with its new and unique devices.

When you look at the market for Windows 8 devices, then Lenovo is clearly looking to dominate the market. Lanci believes that Lenovo is far ahead from competitors, including Dell and HP, in this particular type of industry, with lower prices and innovation being Lenovo's major strengths.


yasirrfc has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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