© luchschen dreamstime.com Business | November 15, 2012
PC background no disadvantage as Lenovo
According to DRAMeXchange, in the third quarter of 2012 shipment volume for Chinese smartphone manufacturers was approximately 60 million units, representing a mild increase of 8% compared to 27% growth in the second quarter.
The top three makers, Lenovo, Huawei and ZTE, accounted for over 40% of total shipments. Surpassing both Huawei’s 8.5 million and ZTE’s 7.5 million, Lenovo has taken the lead with 9 million shipments; the Chinese maker has closed the gap between Samsung to less than 1%. PC industry heavyweight Lenovo has only been in the smartphone game since the second quarter of this year, yet has already reached such shipment figures the following quarter. TrendForce believes Lenovo’s success is due to the following three factors: brand image support, strong sales platform, and clear market positioning. 1. Brand Image Backed by Lenovo’s PC brand image, the manufacturer’s LePhone smartphone series has experienced popularity rivaling international brands like Samsung and Sony in China. Additionally, with comprehensive after-sales support and a successful Internet sales strategy, Lenovo has found the key to the Chinese smartphone market. 2. Sales Platform With years of experience on the Chinese PC and notebook markets, Lenovo has a good grasp on various sales channels. Along with competitors Huawei and ZTE, Lenovo has won a procurement bid with China’s major telecom. With a strong Internet presence in addition to its brick and mortar stores, Lenovo’s diverse sales channels have allowed the maker to expand rapidly on the Chinese smartphone market. 3. Market Positioning China’s smartphone market is divided into four price segments. Entry level devices are priced below 800 RMB, but smartphones in this range are limited in function and unable to provide a comprehensive user experience. The 800 to 1500 RMB segment sees the highest sales and strongest competition, representing around 65% of total smartphone shipments. Nearly all international and local brands have products in this price range, and Lenovo has focused its greatest efforts on this segment, offering models for business individuals as well as younger consumers. The 1500 to 2500 RMB range is dominated by high-end models from manufacturers with stronger brand reputation, and Lenovo has been more conservative in this segment although the maker has introduced its flagship series at this price range. Huawei began investing in this market segment in the second quarter of this year, but as the maker’s brand is not quite strong enough yet and there is room for improvement in terms of software-hardware integration, sales fell short of expectation and third quarter shipment targets were not met. Above 3000 RMB, the market is ruled by international manufacturers like Apple and Samsung, and it will be a while yet before Chinese-based vendors can hope to match them in terms of brand recognition and consumer acceptance. Looking at Lenovo’s smartphone product strategy in 2012, the maker has four different series of models in three different price segments. By meeting demand from various consumer groups, Lenovo is strengthening market share and brand acceptance before attempting to expand by adding higher-priced models to its lineup or offering its products internationally. In comparison to other PC makers that have turned to the smartphone market, Lenovo has shown stronger pricing strategy and sales channels. Making full use of its marketing resources, the maker has been able to successfully break into China’s smartphone market in a mere six months. For its next step, in 2013 the manufacturer will introduce a quad-core chip, MT6589, and dual-core chip, MT6577, developed in cooperation with partner MediaTek, in an aim to strengthen its presence in the high-end market and expand to the global market.
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