Lenovo's rise amid giants defies critics

In the time that you take to read this, people around the world will have snapped up a Lenovo computer, tablet or smartphone - about one of these electronic devices every four seconds or so.

Lenovo Group Ltd has defied the skeptics to prove that an Asian company, in this case a Chinese personal computer maker, can emerge as a multinational player - not just as a manufacturer of products for other companies but as a truly global brand.

Lenovo now has the largest global market share of PCs and is in fourth place in the United States. It is also the fourth largest tablet company in the world behind Apple Inc, Samsung Group and AsusTek Computer Inc. It is currently producing the type of mobile phones that make people salivate.

"You want to see a really, really nice phone? Look at Lenovo," said an industry consultant during a recent interview. It was an unprompted comment in the middle of a conversation about innovation in China.

The Lenovo K900 is indeed a very sleek phone; nice to hold and easy to operate. Over the next year or two, the company wants to introduce its phones in two dozen new markets.

Lenovo, the once lumbering enterprise known as Legend, has become a nimble global player.

Starting from a small business launched in 1984 by 10 scientists from the Chinese Academy of Sciences, Lenovo Group Ltd has expanded fast to acquire IBM's PC business in May 2005.

Lenovo's track record of partnerships with foreign companies had not previously been successful. A 2002 drive to hire managers from Silicon Valley had been a bust, with few of them lasting more than a year. The IBM purchase was to have a happier outcome.

In 2004, Lenovo had just 2 percent of the market and was ranked ninth globally among computer manufacturers. It had a market capitalization of about $3 billion.

After the IBM deal, Lenovo became the third-largest PC maker in the world, still well behind Dell and Hewlett-Packard.

Some growing pains followed the acquisition but, thanks to a distinct governance structure, an ability to straddle multiple cultures and a constant and company-wide drive to innovate, Lenovo took over the single largest share of the PC market in the world last month.

"We are not satisfied with that. We are looking forward to achieving more in the next three or four years," says Robert Li, executive director of supply chain for Asia-Pacific at Lenovo.

Lenovo has grown into a $34 billion company with products in 160 countries. Few other Asian companies have been able to navigate the global marketplace as successfully as Lenovo - and in such a competitive field.

The company follows a "protect and attack" strategy: Protecting its major market base in China to ensure it remains the most profitable for the company while attacking prospective customers in new and emerging markets such as those in Latin America.

It is also aggressively seeking new customers in countries that make up the Association of Southeast Asian Nations (ASEAN). where Lenovo is already a very strong player but is hoping for rapid growth amid a growing middle class and the emergence, in 2015, of a more unified market.

Deals and acquisitions have been at the heart of Lenovo's growth. In 2011, it entered into a joint venture with Japan's NEC Corp and German electronics firm Medion AG. In 2012, it entered into deals with Taiwan-based company Compal Electronics Inc, cloud computing provider Stoneware and server company EMC Corp. This year, it acquired Brazilian electronics firm CCE Ltd.

Now the company is morphing again, from being a PC vendor to being what it calls a PC-Plus vendor - meaning selling not just personal computers, but other computer products such as tablets and smartphones. For the first time in its history, the company sold more phones and tablets than PCs.

At the launch of their new high-end Yoga tablet in Los Angeles last month, Lenovo announced US actor Ashton Kutcher had joined the group as a product engineer. The tech-savvy star's role is to help develop products to compete with Apple's iPad tablet series.

Following Kutcher's portrayal of Apple cofounder Steve Jobs in the recent movie Jobs, Lenovo's celebrity hire will help boost brand awareness. It is a smart move in competing with the industry giants.

"Lenovo not only remains the top PC company in the world, but is also already the number four player in both smartphones and tablets worldwide and continues growing rapidly," said Yang Yuanqing, Lenovo's chairman and CEO, on the release of the company's third-quarter results.

Jenny Lai, an analyst at HSBC, attributed the rapid rise in profits over the last quarter not to PCs, but to cost control and the company's smartphone business.

It would be unfair to call Lenovo a China company; today, it is an undisputed global player. True, the company derives more of its revenues from China than from any other region, but not so much as to be the single dominant line in the revenue chart.

In the third quarter of this year, Lenovo earned $3.8 billion in China, $1.5 billion elsewhere in the Asia-Pacific region, $2.3 billion in Europe, the Middle East and Africa, and $2.2 billion in the Americas.