Lenovo aims to overtake HP PCs in Europe by 2015

Bloomberg NewsSeptember 5, 2013 

Germany Gadget Show Lenovo

New Lenovo Vibe X smartphones are displayed at IFA, one of the world's largest trade fairs for consumer electronics and electrical home appliances, in Berlin, Germany, Thursday, Sept. 5, 2013. IFA will take place on the Berlin Exhibition Grounds from Sept 6 to 11, 2013.

GERO BRELOER — AP

Lenovo Group, the biggest maker of personal computers, is pushing to overtake Hewlett-Packard for the lead in Europe by 2015, even as it expands in tablets and smartphones.

Lenovo sees “significant” potential to expand in Europe, the Middle East and Africa, according to Gianfranco Lanci, the company’s president for the region.

“We want to become No. 1 within the next 18 months – let’s say by the beginning of 2015,” Lanci said in an interview at the IFA consumer-electronics show in Berlin. “There’s very big growth opportunities on PCs in the whole region, and there’s still room to grow.”

While Hewlett-Packard held onto its lead in the region in the second quarter with 18 percent of market share, it’s lost ground as Lenovo, which has its headquarters in Beijing and Morrisville, has been gaining, according to data from Gartner. Lenovo accounted for 12 percent of shipments for the period, surpassing Acer.

Lenovo employs 2,200 workers in Morrisville, up from 1,500 at the beginning of 2010.

Branching out

To reach the top spot, Lenovo is introducing new laptops as well as combination devices that convert from notebooks to tablets. It introduced three ThinkPad laptops this week that are thinner and lighter than previous models, and a collection of “multimode” devices designed for business and home users.

Michael Thacker, a spokesman for Palo Alto, Calif.-based Hewlett-Packard, declined to comment.

Lenovo is branching out beyond PCs as well. It unveiled a “premium” device for its smartphone lineup in Berlin in a challenge to market leaders Samsung Electronics and Apple. The Vibe X has a 5-inch display and runs Google’s Android 4.2 system. It will go on sale in China next month and will expand outside the country starting in December, the company said in a statement.

“We plan to enter Europe by mid-next year” with the device, Lanci said in the interview. The price will be at the high end of Lenovo’s range of smartphones outside China – 149 euros to 499 euros ($200 to $650).

Lenovo rose to become the second-largest smartphone vendor in China and the fourth-largest globally with inexpensive handsets. Now it plans to go upscale with devices that can pose a more direct threat to Samsung’s Galaxy S4 or Apple’s iPhone. Lenovo released its flagship K900 in May, and the Vibe X expands that “premium smartphone portfolio,” the company said.

Open to acquisitions

Lenovo is also setting goals for 5 percent market share in tablets this year in Europe, the Middle East and Africa, and 10 percent in 2014. “We need to bring tablets at the same level of PCs,” Lanci said. “That will take at least two years.”

To keep up with its expansion plans, Lenovo is “open to acquisitions if they make financial sense from a geographic and product perspective,” Lanci said. Still, “we don’t really rely on acquisitions to grow. We can grow organically,” and the company isn’t looking into any specific purchase now, he said.

“The investment needed in the smartphone and tablet businesses is much more than what you need in PCs,” Lanci said. “This is why we will see more consolidation. If you don’t have enough scale, you’re not able to compete.”

All three divisions are making money, with the PC division generating a higher profit margin because tablets and smartphones require more investment, Lanci said at a press conference.

“We are very careful about balancing profitability in all divisions,” Lanci said.

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