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Patrick Zhou, principal analyst, joined Strategy and Planning Division, H Corporation in 2005 and is now responsible for delivering analysis, insight and recommendations of mobile internet and device to board of directors. He is influential and was awarded the Gold Medal last year, the highest... More
  • Hot analysis: What does Tablet mean for Lenovo? 0 comments
    Apr 10, 2011 6:10 AM | about stocks: LNVGY

                                             News
    Lenovo COO says Tablet PCs will account for 18% PC market share in 5 years
                                          
                                          Analysis
    Tablet will take the place of Netbook and even do more
    : The popularity of Netbook since 2008 has exceeded the expect of many people who think it is nothing more than a low-price notebook. However, from a higher perspective, it implies a profound change in the PC industry that people do not pursue mere the performance of chipset, instead, they pursue a light, compact, and cute device which enables them to access network conveniently. The market volume of netbooks is composed of two parts, new added volume and replaced volume of notebooks. Now tablets will completely take over the market share of netbooks soon and even do more. When a family intends to buy a second computer for kids or elderly, it will probably buy tablets. Moreover, young people can get used to new operation method of new computers much more easily. They will hate the traditional operation, such as keyboard and mouse, long time of waiting for being ready, too much consumption of energy, weight, size and 3G/4G disconnection. Tablets will grow with them and even become their first choice when they consider buying a computer on their own.
    Good opportunities for Lenovo: Firstly, Double A based in Taiwan successfully increased their market share by early investment in Netbooks. Now Lenovo can copy the experience of Double A and beat rivals by early investment in tablets, next generation of Netbooks. Secondly, HP and Dell have begun to move their focus to cloud computing, reducing their concern on low-margin PC sector. This creates an objective opportunity for Lenovo. Thirdly, since Apple dominates the market of tablets, Google does not want to sacrifice its branding and open its source to any tablet maker. Google is more likely to seek strategic cooperations with big vendors.
    Challenges for Lenevo: Firstly, Google is not a good business guy so far. Accordingly, Lenovo has to invest in R&D and convince Google of its determination, technology capability, innovation and market prospect. Furthermore, Lenovo needs to build strategic relationship with some chipset vendors, such as NVIDIA, QUALCOMM, BROADCOM. Secondly, as netbooks were welcome by young people in developed countries firstly and mostly, tablets are the same. Lenovo has a very limited presence in countries outside China and has to strengthen its capability in distribution channel, branding and supply chain globally. 

                                                      Implication
    Overall, Tablet has brought about a good opportunity for Lenovo. It may rise to No.1 or No.2 position if it can launch new products rapidly and explore foreign market successfully.

    Stocks: LNVGY
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