CES 2016: Lenovo CEO still finds PC industry attractive despite overall decline

The Chinese hardware giant is expecting a PC refresh cycle to hit, with many machines in use over five years old.
Written by Chris Duckett on

The PC industry continues to experience declines in shipments and sales, but amongst the carnage, Lenovo CEO Yang Yuanqing has said his company is still in a good place.

"We are leveraging the consolidation of the industry because some players are leaving -- we take their share," he told journalists at Consumer Electronics Show (CES) 2016.

Yang said the PC industry remains "a very decent industry", and added that he sees a looming refresh cycle on the horizon. In November, Intel said more than 1 billion PCs were over three years old, and half were four to five years old.

"Those machines should be replaced," the CEO said. "This industry, this is still more than 300 million units a year, so probably a $200 billion industry.

"It's still very attractive."

To drive the refresh cycle, Lenovo will focus on making PCs more productive, and that means using the cloud to support them.

"For different groups of customers, we have a different product, and also we have a different cloud to meet their requirements," Yang said.

"We need to work with Microsoft on Office 365, we can work with Salesforce.com on customer CRM, we can work with Workday on human resources. These kinds of cloud must be connected to devices, so this will be Lenovo's strategy: Every device will be connected to a certain cloud, no matter if it is PC, tablet, or smartphone."

The company has previously said that it wants to gain 30 percent market share in PCs.

Last year, Lenovo found themselves in a massive amount of hot water over the preloading of Superfish adware on its consumer line of laptops.

The Lenovo CEO said the company has worked to clean up its act.

"Definitely we made a mistake," he said. "After that, we will provide a more safe product to our customers, no matter if it is commercial customers or consumer customers.

"We will not pre-install third-party software, only operating system and Lenovo software."

However, the security of Lenovo's own software has been found wanting, with its update software found vulnerable in May last year.

"We have the principle to guarantee safety, because in the past our software developers only focused on whether they can make the software work, they paid less attention to whether the software is safe.

"We gave the guidance to our software developers that from now, they should pay attention to both."

Earlier on Thursday at CES, Lenovo COO Rick Osterloh revealed that the company would be phasing out the Motorola brand name in favour of a Moto by Lenovo moniker.

According to Dillon Ye, Lenovo Asia-Pacific Mobile Business vice president, the change will allow Lenovo to move its brand name into premium smartphones, where previously it had focused on the lower end of the market and in developing nations.

"That is something we want to change," Ye said. "Moto will be the sub-brand to focus on the mainstream and performance side, and Vibe will be the sub-brand to focus on entry and mainstream."

Ye said the entity formerly known as Motorola is approximately 70 to 80 percent of the integration work from its $2.9 billion purchase of Motorola in 2014. The benefits to come would include quicker refresh cycles for handsets, and lower costs through better supply chain integration.

"Moto is going to be faster," Ye said.

"For the performance [handset] ... maybe it's a still annual refresh, but for the mainstream and entry segment, where we need that kind of speed, we can refresh the phone maybe three times in two years; for the entry segment, twice per year."

Although Google bought Motorola Mobility for $12.5 billion in 2012, Motorola Solutions has continued as a separate company focusing on telecommunications equipment, which can cause some confusion.

"We do not own the Motorola name," Lenovo Asia-Pacific CMO Nick Reynolds told ZDNet.

Disclosure: Chris Duckett travelled to CES as a guest of Lenovo

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