Lenovo narrows market gap with HP

The gap in market share between the computer manufacturers Hewlett-Packard Corp and Lenovo Group Ltd has narrowed to 2 percent, according to the Chinese company on Thursday.

Lenovo reported record sales of $8.4 billion for the company's fiscal third quarter of 2011. It also won a global market share of 14 percent, making the company the second-largest PC maker by market share, after reducing the gap with HP to 2 percent from 9 percent in 2010, according to the IT research company International Data Corp.

The company attributed its performance to a dramatic surge in sales of Internet mobile devices and growth in mature markets. The company said sales revenue for its Internet mobile devices, including tablet PCs and smartphones, grew 159 percent year-on-year to $565 million between October and December.

Liu Jun, Lenovo's senior vice-president and president of the company's Mobile Internet and Digital Home Business Group, said the company's share of the smartphone market increased from about 2 percent at the beginning of 2011 to 10 percent in December, largely because of a promotion campaign by China Telecom Corp Ltd.

"We saw strong progress in our Mobile Internet business. During the (third) quarter, Lenovo sold more than 6.5 million phones, and almost half of those were smartphones. Lenovo's share of the Chinese smartphone market reached double-digits in December," said Yang Yuanqing, Lenovo chairman and CEO.

Yang said that although the Internet mobile devices division only accounts for about 5 percent of total sales revenue at present, the figure will increase to 10 percent in the near future.

The increase in profit was also driven by the company's growth in mature markets, including the US, Japan and Europe.

Lenovo bought the US PC division of IBM Corp in 2005 and last year it announced a $175-million joint venture with Japan's NEC Corp and the acquisition of Medion AG, a German multimedia and consumer electronics maker.

"For the first time, Lenovo has become the global number one vendor of commercial PCs and consumer desktops, despite the worldwide shortage of hard drives in the past quarter," Yang said. Lenovo generated pre-tax income of $192 million worldwide during the quarter.

"Because Lenovo maintains a high volume of PC shipments, it has stronger bargaining power with hard-drive providers than other companies," said Wang Jiping, a senior analyst at IDC Asia-Pacific.

After entering markets through mergers, Lenovo has cooperated with its local partners to introduce tablet PCs to Japan and Germany, and the company said it will introduce smartphones to those markets soon.

"Europe is one of our major battlefields this year, however, previously our business there only focused on the commercial sector," said Yang. "Lenovo will place greater emphasis on the European consumer market from April, with the help of Acer Inc's former CEO Gianfranco Lanci." Lanci will begin working for Lenovo in April.

On Tuesday, Acer said that it has filed a lawsuit in a court in Milan, Italy, against Lanci, its former CEO and president, for breaking a non-competition clause, but declined to release further details.