Lenovo has identified SmartPhones and Tablets as the Next Growth Center for its Products. On this front, it is working to improve margin: 1) enlarging scale, 2) increasing mid-to-high-end product offerings and 3) increasing sales in higher-margin open channel.
Lenovo’s smartphone business just turned profitable in the last quarter. However, we expect part of the profits it earned from China’s smartphone markets will be reinvested in developing smartphone business overseas, such as Southeast Asia and Russia.
Scale We project Lenovo’s smartphone shipments to deliver substantial growth of 50%+ YoY in F2014. Lenovo’s smartphone market share in China has reached 13% in C4Q12 from merely 1% in C1Q10.