By Alexandra Burlacu | May 27, 2013 01:55 PM EDT
Lenovo seems to be one of the fastest-rising smartphone makers and it reportedly eyes the U.S. market now, with handsets to hit the States within the year.
Android-powered smartphones made by Lenovo made quite some waves in China, but the company has yet to plunge into the great U.S. smartphone market. All that may change soon, however, as Lenovo reportedly plans to expand its smartphone operation to the U.S. as well.
Lenovo CEO Yang Yuanqing told the Wall Street Journal over the weekend that the smartphone market represents a major new growth opportunity for the company and Lenovo wants to start selling smartphones in the U.S. within a year.
The publication reports that Lenovo is "pushing aggressively into the smartphone market," as consumers are increasingly shifting toward mobile devices rather than traditional PCs. The company fared quite well in the PC industry, generating solid sales and higher margins, but Lenovo is also looking for new opportunities to ensure its long-term growth.
"Smartphones are our new opportunity," the CEO told the WSJ in an interview. "As a public company you always have to consider how to grow."
Lenovo may have arrived late at the smartphone party, but the company saw rapid growth within the market it's already the second-largest smartphone vendor in China, trailing only Samsung. While it expanded its smartphone business outside China over the past year, starting with emerging markets such as Russia, India and Indonesia, entering more promising markets such as the U.S. and Europe is crucial for the company's long-term success in the smartphone business.
Lenovo is a major brand for Chinese consumers, but in the U.S. the company will have to fight a hard battle to become and stay relevant. Today's smartphone market is highly competitive and the U.S. is quite a tough playground. The company is a world-class PC vendor but selling smartphones will most likely entail new challenges.
Speaking to the WSJ, Yang compared the smartphone market to the fashion industry and said the company will boost its marketing efforts to strengthen its brand and presence in the U.S.
At the same time, Lenovo will also likely face new challenges in terms of sales channels for its handsets. While in emerging markets such as Asia retailers typically sell mobile handsets in the open market, mobile phone vendors in mature markets rely more on telecom operators and subsidies to lower the upfront cost of smartphone purchases.
Lenovo's smartphone business is profitable in China, but the CEO said the smartphone business will not be a major source of profit growth for the short term because the company will invest in marketing and support other expenses associated with expanding the business outside China.
Lenovo continues to outperform the generally sluggish PC industry, but the company is well aware that the PC market is no longer growing as fast as it used to. The company still draws more than 80 percent of its revenue from desktop and laptop PCs but saw a more rapid growth in smartphones.
"Our [smartphone] volume and market share are still tiny," said Yang, referring to the company's presence in the global market, against fierce rivals such as Apple and Samsung. "For us, this is just a start."
It may be so, but that "just a start" is actually a great debut, heralding big things for the company. In the last quarter alone Lenovo saw its smartphone shipments in China jump more than two-fold from a year earlier. Just imagine what a breakthrough in the U.S. market could mean.
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