No. 1 Lenovo still sees growth ahead

dranii@newsobserver.comJuly 11, 2013 

The president of North American operations for Lenovo, the newly crowned king of the worldwide PC industry, is convinced the industry’s slump has hit bottom and better times are ahead.

And Jay Parker has no doubt Lenovo has the momentum to take advantage of the upswing he anticipates.

“We have been defying gravity, from a growth perspective,” Parker, who is based at the company’s executive headquarters in Morrisville, said of the company’s steady string of quarters in which it has outpaced the market and grown faster than its competitors.

“We think there is a lot of headroom,” he added. “When you’re only 17 percent of the market, you have a long way to go.”

Actually, being “only” 17 percent of the market is the envy of the industry right now. On Wednesday Lenovo, which four years ago ranked No. 7 in worldwide PC shipments, became the undisputed No. 1 for the first time. Market research firms Gartner and IDC both reported that the company shipped more PCs than any other PC maker in the second quarter.

“We’re happy about it, but not satisfied,” Parker said.

However, the second quarter also marked the fifth consecutive quarter of declining worldwide PC shipments, the longest decline ever. Even Lenovo’s shipments dipped slightly, although it far outpaced its competitors.

But, Parker said, “We have seen the worst of it at this point. There are factors out there that lead us to believe we could see some growth toward the end of this year and next year.”

One of those factors is that Microsoft has announced that it will end support of the Windows XP operating system, which dates back to 2001, on April 8. That means no more security updates or technical help.

“About 40 percent of businesses are still running XP,” said Parker. “That will be a driving factor for a commercial refresh as we go into the end of this year and the beginning of next year.”

In addition, although the Windows 8 operating system from Microsoft has received a tepid response from critics and consumers since it debuted in October, Parker is upbeat that the Windows 8.1 update that Microsoft plans to release later this year will fare better.

Windows 8, which includes touch-screen capabilities, is “a much faster, much more intuitive and much more user-friendly experience for the consumer,” Parker said. “It does take a little bit of education and getting used to, and I think we have seen some of the ramifications of that early on.”

But Lenovo isn’t putting all its eggs in the PC basket. It views its playground as the “PC Plus” market, which includes tablets, smartphones, smart TVs and other devices. Lenovo is the No. 2 smartphone company in China but doesn’t yet sell them in the U.S. market.

For now, Lenovo’s foray beyond PCs in North America is limited to tablets, which aren’t included in the PC shipment data compiled by Gartner and IDC. IDC projects that this year, for the first time, the worldwide tablet market will surpass the market for laptops and other portable PCs.

Lenovo’s newest tablets have been selling well, said Parker. “Ultimately, we want that to be a major part of our business.”

Although Apple’s iPad is far and away the best-selling tablet – accounting for 39.6 percent of all shipments in the first quarter, according to IDC – lower-priced tablets that run on Android software collectively counted for more than half the worldwide market. Lenovo wasn’t ranked among the top 5 tablet makers.

Lenovo’s local presence has expanded as the company has prospered. Today Lenovo has 2,200 employees in Morrisville, up from 1,500 at the beginning of 2010.

“If we continue to grow like we have and like our expectations are, we would expect to add to the team as necessary,” Parker said.

Those employees will have an opportunity to celebrate Lenovo’s ascendancy to undisputed leader of the PC universe next Tuesday.

The festivities will include “a little bit of champagne, a little bit of cake, and some high fives all around – and then we’ll get back to business,” Parker said.

Ranii: 919-829-4877

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