Lenovo’s struggling mobile business sets steer on high-end market


HONG KONG After a bruising tumble from a mark as a world’s third-largest mobile phone builder following a merger of Motorola 3 years ago, China’s Lenovo Group Ltd (0992.HK) is counting on a pull upmarket to stop a draining in a smartphone business.

While a company, that vies with HP as a world’s largest PC maker, returned to distinction in a year to March, waste in a smartphone business worsened as offered waste for new products and pivotal member costs increased.

The group’s phone problems started after it acquired Motorola Mobility from Google for $2.9 billion in 2014 though struggled to confederate a assets. That, total with extreme foe from lower-end manufacturers in a home bottom of China such as Xiaomi and Oppo, saw a tellurian position tumble to eighth in 2016.

A recently announced reorder of a China business directed during heightening a PC brand’s consumer concentration comes amid an ongoing bid to tie a mobile branding and change a concentration to pricier models underneath a Moto brand.

“Our plan is to prioritize mature markets … that need brands and innovative products, since rising markets need efficiency,” Chairman Yang Yuanqing pronounced of Lenovo’s mobile business during a press discussion in Hong Kong on Thursday.

“So we will have dual teams catering to a dual kinds of markets with opposite product lines.”

Lenovo faces a toughest conflict in a home bottom of China, where it has slipped out of a tip 10 smartphone vendors. Shipments domestically declined 80 percent year-on-year or 55 percent quarter-on-quarter in a initial entertain of 2017, according to information from Canalys.

The association now has 3 phone brands in China – a reward Moto brand, a cheaper Lenovo series, and an online-focused ZUK code launched in 2015.

A Lenovo mouthpiece pronounced a tellurian mobile plan would concentration on a Motorola brand, nonetheless it would continue to support a other lines, such as ZUK.

Moto products, including a reward array of modular phones designed with detachable components that can be transposed or upgraded, helped propel Lenovo to be a second-biggest businessman in Brazil, after Samsung Electronics Co Ltd (005930.KS), Yang said.

Shipments in Brazil rose 56 percent in a initial 3 months of a year according to Lenovo, overtaking India as a biggest market, where volume grew 34 percent.

The normal offered prices of Lenovo’s mobile products rose 15.1 percent in a past year, according to a financial report.

Mature marketplace competition, where Yang pronounced Lenovo’s categorical rivals are Samsung and LG Electronics Inc (066570.KS), is reduction extreme than in rising markets, where a low entrance separator authorised in “too many Chinese vendors, some of that contest irrationally”.

He combined Lenovo will have 3 some-more telecom partners in a U.S. this year, while a opening in Western Europe is improving.

NEW PRIORITIES

Yang pronounced Lenovo is on lane to accommodate a idea of branch around a mobile business by a second half of a mercantile year starting in April.

At a same time, some analysts contend a association should cut a mobile waste in China and concentration on building a strength in other markets.

“I consider they should deep-six their China mobile business. Their non-China substantially has a possibility if it’s really narrowly geographic and product focused,” pronounced Bernstein researcher Alberto Moel.

Lenovo is a fourth-biggest smartphone seller in India, with a 9.5 percent marketplace share, that compares with Samsung in tip place with 28.1, according to IDC.

While it faces augmenting foe from new entrants Oppo and Vivo, it enjoys good code loyalty.

“I like Lenovo phones for their good battery backup, intelligent looks and a altogether experience,” pronounced Bhaskar Kotian, a Mumbai businessman who has purchased during slightest 6 Lenovo smartphones for friends and family in a past dual years.  

Despite calls to write off a China problems, Yang insists there are no skeleton to travel divided from a domestic mobile business.

“We would never give adult a China mobile business, since it is 30 percent of a universe market,” he said.

(This story corrects to repair typographical blunder in headline.)

(Reporting by Sijia Jiang; Additional stating by Sankalp Phartiyal; Editing by Sam Holmes)

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