Lenovo: Will manufacturing edge matter without design?

Lenovo: Will manufacturing edge matter without design?

Summary: The big question here is whether Lenovo can leverage a manufacturing edge on its home turf in China. Short answer: Probably not.

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Lenovo isn't on the outsourced manufacturing bandwagon. Why? It doesn't have to since its big market plays happen to be in emerging markets.

The Wall Street Journal focused on Lenovo's manufacturing operations. The gist: While other technology manufacturers have outsourced to China---Apple and HP to Foxconn for instance---Lenovo has produced its own wares.

Now Lenovo is trying to manufacture and design its way to be a major tablet and smartphone player. The big question here is whether Lenovo can leverage a manufacturing edge. Short answer: Probably not.

Also see: Lenovo's next growth act will be much trickier

For starters, Lenovo can manufacture under its own nameplate because it happens to be based in China. The company has also focused on emerging markets with its growth strategy. Lenovo aims to defend mature markets (Europe, North America) while attacking emerging markets (China, Brazil).

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In other words, all Lenovo has to do is put its manufacturing in emerging markets and China.

However, there are a few roadblocks for Lenovo. Among the key ones:

  • Labor costs in China are only going to increase.
  • Lenovo isn't going to manufacture at the scale of Foxconn and other outsourced tech product makers. It's unlikely that Lenovo will garner the same efficiencies.
  • The company will have to compete for labor on its home turf.
  • And design is what wins the day anyway. If Lenovo can't design compelling products that can compete or trump Apple then where it manufactures won't matter much.

Give Lenovo a lot of credit. The company has grown at a breakneck pace. Whether Lenovo can keep that pace up remains to be seen.

Topics: Hardware, Laptops, Lenovo, Mobility, Tablets

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