Lenovo: Post-PC era not a reality

Desktops and laptops might be overlooked amid fervor over mobile devices currently but PC market still has room to grow profitably, particularly in emerging markets, says exec.
Written by Liau Yun Qing, Contributor

Naysayers who predicted there is no future in desktops and laptops and it will be all about mobile devices such as smartphones and tablets are wrong as PCs are "here to stay" and hardware vendors such as Lenovo will be able to grow profitably, particularly in emerging markets.

This was the sentiment of Koh Kong Meng, general manager and executive director of Lenovo Asean, who also dismissed the term "post-PC era" as one that was coined by "certain industry analysts and certain industry veterans".

During an interview with ZDNet Asia, the executive said "PCs are here to stay" amid the increasing proliferation of mobile devices as users will carry multiple devices and use these devices for different functions. PCs, he noted, are preferred for content creation while media tablets, for example, are for content consumption.

Backing his observations up, Koh said desktops and laptops still constitute the majority of the worldwide PC market. Citing IDC's research, he said 90 million PCs were shipped in the third quarter of 2011 and, based on this quarterly figure, the year's PC shipment would come up to almost 400 million units.

In addition, most of the current PC install base worldwide is from developed countries, which means emerging markets--these include Asia, India, Russia, Eastern Europe, the Middle East, Africa and Latin America--are where the opportunities lay for PC makers, he pointed out.

Zooming in on countries in the Southeast Asia region, Koh said: "In emerging countries such as Indonesia and Thailand, where the population is huge and PC and Internet penetration rates are low, we believe there is room to grow and to grow profitably."

He acknowledged that mobile devices will be the first device users in emerging countries get on the Internet. That said, he believes that there is still room for PCs in these markets.

Indonesia, for example, has many consumers that own Research in Motion's (RIM) BlackBerry smartphones, which they use for messaging, social networking and consumption of media content, the executive stated. But once users want more out of their Internet experiences, such as the ability to create content, this is when PCs and notebooks are sought after, he added.

Maintaining profitability
Quizzed on how Lenovo is maintaining profitability amid declining margins in the PC market, Koh attributed this to the company having economies of scale. By increasing volume, the company is able to reduce not only the cost of components but also the cost of sales and expenses. This helped Lenovo roughly double its net profit year-on-year in the first quarter of its 2011-2012 financial year, he noted.

Having a good balance of product portfolio is also important for sustainable growth, the general manager added.

"It's not just about products with lower price points. It is about making sure that we have a balanced portfolio from our enterprise laptops such as the ThinkPad to consumers ones such as the IdeaPad, which are two different products for two customer segments," Koh stated.

The executive's comments come in the wake of rival Hewlett-Packard's (HP) looking into options to offload its PC business and focus on the more lucrative software and services lines of business. Following a top-level management reshuffle that saw Leo Apotheker replaced by former eBay CEO Meg Whitman in September, however, the company revealed it is reconsidering its stance regarding any possible sale.

IDC's third-quarter PC shipment findings, released last Thursday, also showed that HP, the world's biggest PC maker, continues to grow, with a 5.3 percent uptick year-on-year. Lenovo, meanwhile, leapfrogged Dell into second position after experiencing strong gains across all regions as it continued its channel expansion and capitalized on the disarray among the other top vendors, the research firm pointed out.

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