Seeking Alpha

Lenovo in attack mode on mobile

  • With PC's now in "protect" mode, the "attack" part of Lenovo (LNVGY.PK) CEO Yang Yuanqing's "Protect and Attack" strategy has shifted to tablets and smartphones. Yang has reorganized the company to address "attack markets" head-on, and believes even gorillas Apple (AAPL) and Samsung (SSNLF.PK, SSNGY.OB) aren't invincible.
  • "We know the playbook; we've done it on PCs," says Gerry Smith who has seen it up close as a former Dell exec, and now heads Lenovo's Americas group. "We can attack on scale. We'll attack on cost efficiency and speed. We can attack these guys from the bottom, and put a lot of pressure on them from a product portfolio, pricing, time-to-market perspective."
  • Lenovo produced 11.4M smartphones and 1.5M tablets in FQ1, a triple and a quadruple, respectively, from a year earlier. The company this week launched a new flagship premium phone, the Vibe X, and plans a number of other new products before year's end.
  • "What P/E would investors pay for a 'Chinese Apple,'" asks bullish portfolio manager James Weir. He notes the company continues to gain market share in flat PC markets, but the potential for "rerating" is in mobile. "If Lenovo can keep growing this, they can earn the right to be rated with Apple and Samsung as a sexy consumer electronics player, not just a PC box seller."
  • SA Pro's Stephen Simpson is of a similar mind about Lenovo's opportunity in mobile.
Comments (20)
  • Papa of Four
    , contributor
    Comments (551) | Send Message
     
    With all display supplied by HIMAX we guess.

     

    http://seekingalpha.co...
    7 Sep 2013, 09:47 AM Reply Like
  • Dantes_Will
    , contributor
    Comments (324) | Send Message
     
    "We know the playbook; we've done it on PCs,"

     

    The Chinese playbook on 'product development' and market share gain is well known.

     

    1) Steal/copy any new IP that took other companies millions in investments and manhours to develop.

     

    2) Then undercut pricing via cheap labor & direct Chinese government subsidies or indirect vendor subsidies.

     

    3) Monopolize domestic market share through high tariffs on competing imports, and outright exclusion of popular products (China Mobile is a state entity, essentially controlled by government princelings. Li Yue does as he is told, which is why CM refused to carry Apple)

     

    4) Profit
    7 Sep 2013, 10:51 AM Reply Like
  • Perkins Cove
    , contributor
    Comments (625) | Send Message
     
    "We know the playbook, we've done it on the Buccaneers" - Geno Smith.

     

    Oh, wait, that's Gerry Smith. Sorry. Hey, that's a football phrase, right? Cheers.
    7 Sep 2013, 12:45 PM Reply Like
  • Philip Marlowe
    , contributor
    Comments (920) | Send Message
     
    Alas, we cannot complain about cheap chinese labor because all US companies use cheap chinese labor. I remember several years ago someone asked michael dell "arent you affraid of competition from low cost chinese manufacturers?" He chuckled and said "we are a low cost chinese manufacturer".

     

    The only counterexample to that trend is google with the moto X. We will see what happens there, but i wish them luck.
    7 Sep 2013, 01:01 PM Reply Like
  • rcpatrick5443
    , contributor
    Comments (678) | Send Message
     
    I'm surprised that such a jumble of hype got published.
    7 Sep 2013, 10:53 AM Reply Like
  • jjkiam
    , contributor
    Comments (331) | Send Message
     
    ! So they have just discovered that they need to get into the smartphone and tablet businesses. How prescient!!! I guess Lenovo has a strategy of "Last Mover Advantage"
    7 Sep 2013, 11:15 AM Reply Like
  • SA Editor Eric Jhonsa
    , contributor
    Comments (753) | Send Message
     
    As an Android OEM relying on Google to provide it with an OS and many of its core Web services, Lenovo is a lot more like Samsung than Apple as far as product differentiation goes.

     

    Also, though there's room for more than one winner here, Lenovo has local rivals such as Xiaomi to contend with. Xiaomi has been doing a pretty good job of selling Android phones with high-end specs and mid-range prices, and has even come up with a popular custom UI.

     

    http://bit.ly/19u3pug
    7 Sep 2013, 12:23 PM Reply Like
  • John N. Heil
    , contributor
    Comments (72) | Send Message
     
    Other than in some quarters of China, Lenovo has very little product appeal, solid image or pizazz as does the likes of an Apple. It can compete on price as Apple will now be doing in China, but the larger question is: are they in business or is the essence of Lenovo some variant of a socialist mentality: product without profit for the sake of the masses. Longer term, Apple's growing cash and equivalent hoard, all they can do with that kind of a power base, is the real dynamism and saving grace under virtually any circumstance.
    7 Sep 2013, 01:07 PM Reply Like
  • Deja Vu
    , contributor
    Comments (1153) | Send Message
     
    Yes! We are entering the race to the bottom of commodtized products which is now at hyper warp speed. Apple was undercut by Samsung whcih was undercut by Huawei which was undercut by Micromax and Karbonn which are being undercut by nameless chinese manufacturers.

     

    Lenovo will jump in and cry exultantly "Look Ma! I'm flying" and five seconds later hit with a splat on the profits competed to zero floor 20 storeys below.
    7 Sep 2013, 01:52 PM Reply Like
  • what do I know
    , contributor
    Comments (1049) | Send Message
     
    You are so right! When RIMM?BBRY started its business the news came later that it started its started its business on somebody else's "Patents" and I told my broker that RIMM had to start its own R/D and what happened it will be sold at a "Fire Sale", and same thing will happen to LENOVO, they wought to have their own R/D.
    /
    7 Sep 2013, 02:30 PM Reply Like
  • BigJ1260
    , contributor
    Comments (200) | Send Message
     
    Apple and Samesung only ones making any money in Mobile Hardware.

     

    Lenovos battle cry is that they can be better at losing money on mobile devices than Huawei and others - and that they can do it faster.

     

    It's the OS and tieing consumers into an ecosystem (apps, the cloud etc.) that will give the Hardware value in the end. Apple has not even begun to monetize this aspect to the level that they can and eventually will.
    7 Sep 2013, 02:13 PM Reply Like
  • alext1379
    , contributor
    Comments (706) | Send Message
     
    So basically Lenovo is going to churn out counterfeit products double time now. I know China's playbook too, same as S.Korea Inc and Japan Inc.

     

    Copy, give for free, whitey praises you as he sends his neighbours to the unemployment line.
    7 Sep 2013, 02:21 PM Reply Like
  • Genesis Housing
    , contributor
    Comments (423) | Send Message
     
    they should counter bid for nokia
    7 Sep 2013, 03:47 PM Reply Like
  • Kevin Murphy
    , contributor
    Comments (62) | Send Message
     
    I about 1995, MSFT and INTC earned over 100% of the profits in the PC business -- in other words, most of the players lost money.

     

    The same thing is happening in cell phones, there will be a few companies that provide key components, and a bunch of manufacturers eating each other alive, trying to get by on tiny margins.

     

    We can all predict that QCOM and AAPL will be profitable, they have differentiation. Maybe some small guys with technology can get profitable, but the track record is that AAPL buys them before they go public, like they bought Authentec for fingerprint scanning.

     

    I think AAPL will continue fighting for business via its ecosystem, getting into payment systems, maybe someday buying a credit card company or a company that provides technology to that industry. I don't think Lenovo will compete directly with QCOM, INTC or AAPL, I think it will be one of the players that sucks most of the margin out of a huge business so lots of players eventually exit the playing field, like Panasonic just did.
    7 Sep 2013, 04:13 PM Reply Like
  • dmarilley
    , contributor
    Comments (570) | Send Message
     
    Lenovo has tangible product designs and the flexibility to produce 100 million smart phones at any quality level. With state of the art cellular technology morphing so quickly, a six month product life in North America seems likely, with the best phones being priced as practically disposable. That is simply emerging reality. The word cheap commodity packaged in a more permanent durable outer shell seems to come to mind.
    7 Sep 2013, 06:23 PM Reply Like
  • jjkiam
    , contributor
    Comments (331) | Send Message
     
    I agree with the comments about the race to zero in what is fast becoming a "commoditized" smartphone market. However the key to avoiding this for Apple is the same thing that protected Msft and Intel. Own the operating system and design your own chips. One addtl factor that makes Apple less susceptible to low end commodity competition is their expanding services enterprise. Their growing ecosystem is something that NONE of their hardware competitors from Asia offer. Once Apple fixes it's maps disaster and continues to replace Google from more of it's ecosystem and retain even more advertising revenue then the market may start balancing the overweighted Google PE with a more appropriate Apple PE
    8 Sep 2013, 08:33 AM Reply Like
  • techy46
    , contributor
    Comments (5514) | Send Message
     
    Smart phones and tablets are PC's and based on function, form and size should cost 25-30% less then comparable PC's therefore they should sell for $200-300 and that's going to hurt a lot of sellers.
    8 Sep 2013, 09:36 AM Reply Like
  • chopchop0
    , contributor
    Comments (3131) | Send Message
     
    Lenovo probably should focus on making a decent premium tablet first LOL. There's enough crap at $100 or less level.
    9 Sep 2013, 10:26 AM Reply Like
  • Sam Liu
    , contributor
    Comments (3864) | Send Message
     
    Some 8 years or so I bought a Lenovo feature phone, I would hardly buy another of Lenovo's products. Also something to do with Windows.

     

    Long: MSFT, Lenovo pink sheets
    10 Sep 2013, 09:39 AM Reply Like
  • pocohonta
    , contributor
    Comments (543) | Send Message
     
    Barron's has a front-page article about Lenovo, and the rosy, upbeat growth story narrative sounded good until (page 24) the article discussed the "razor-thin profit margin". It's operating margin is 2.4% (as compared to 5.4% of trouble Dell, and far, far below Apple's 29%.

     

    At 2.4% margin, any supply disruption (ie. memory chip price spike) will easily turn a profitable quarter into a big loss.
    9 Sep 2013, 11:40 AM Reply Like
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