Trade Analytics

Go Back

Lenovo bets on India as global growth slows

Economic Times:  June 16, 2016

New Delhi: Lenovo, the world's largest PC maker, is doubling its efforts in India to achieve global growth in smartphones, especially at a time when its sales are falling in China, which in turn is dragging worldwide sales.

At over $1 billion revenue, India is contributing a little over 10% to global revenue, making the country the cornerstone of Lenovo's growth roadmap, alongside larger developed markets like the US and China. "India is a key strategic market where we intend to continue to invest and grow our share," said Aymar de Lencquesaing, senior vice president of Lenovo Group that owns Motorola Mobility since October 2014.

"The logical next step would be a double digit market share," he said, up from 9%, on the back of new premium mobile phones, increase in local production which can also be used for exports, and venture into the offline retail space. The plan will get further tailwinds from rising purchase power and rapid progression of 4G technologies in the South Asian nation at a time when global smartphone sales are slowing down. Lencquesaing though brushed away slowdown worries.

"We have grown consistently in the PC business when the market has been declining, and can replicate the success in smartphones." India, the world's fastest growing smartphone market, has become home to a number of Chinese smartphone players including Xiaomi, LeEco, Meizu, Coolpad and others, as sales at home have started to taper.

Aggressive local players such as Micromax, Intex and Lava have also carved out their own space in the fiercely competitive market. But Lencquesaing, who is also the chairman and president of Motorola Mobility, feels the country is likely to have the answers to Lenovo's problems.

China, its home market, which is also its largest for all products including personal computers and enterprise business, saw a decline in smartphones revenue by 26% for the year ended March, pulling down global market share by 1.1% to 4.6%. Revenues in India, however, grew 90% on-year. The company's global smartphone revenues of $9.7 billion as of year ended March 2016.

"India's revenue share could rise, it is a big market," said Lencquesaing. As an initial step towards taking India in that direction, Lenovo will launch the first of the premium smartphones — Moto Z — in September this year, just a month after it starts shipping to the North American markets. Moto Z is likely to be priced upwards of $300, and customizable with modular accessories magnetically attachable to the back panel, which will be priced from $50 to $200 or more.

The accessories, or Mods, will be launched simultaneously. Lenovo will also ramp up local production capacity of smartphones from Flextronics' manufacturing facility in Chennai, from the present 6 million a year, if needed, and is open to exporting devices, making India a manufacturing and export hub for the company.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.