Posted by: Bruce Einhorn on February 01, 2007
Lenovo can’t seem to get many Americans to accept the idea of buying computers from a Chinese company. Today China’s No. 1 PC maker came out with its quarterly numbers and they show that Lenovo’s shipments of PCs in the Americas dropped 4% in the quarter ending Dec. 31. This despite an intense effort by the company to convince Americans that it’s okay to buy from Lenovo, which acquired the old IBM PC division in 2005. A year ago, Lenovo launched with great fanfare a line of new, low-cost computers designed for American users, especially small and midsized businesses. Lenovo also announced that the new computers wouldn’t have the letters IBM or the word Think, even though Lenovo had rights to them thanks to its IBM acquisition.
At the time, lots of observers were upbeat about Lenovo’s chances. In the BW story that I wrote then, I quoted one analyst saying that the new Lenovo computers “should be great.” Maybe they are, but so far Lenovo’s position in the U.S. hasn’t improved. It’s been almost a year since Lenovo launched this effort to win hearts and minds of Americans, and not only hasn’t Lenovo boosted sales, it seems to have lost more ground. One reason might be hesitation on the part of some buyers to purchase PCs before the launch of Vista, but that didn’t seem to hurt HP, which enjoyed double-digit growth in the U.S. last quarter. Meanwhile, according to market research firm IDC, “Lenovo continues to struggle with declining volume” in the U.S. Some other disappointing news for Lenovo: Sales in Asia-Pacific (excluding Greater China) dropped 1%. That’s significant because the company has been trying to reduce its reliance on revenue from its home base in China. Another part of the diversification strategy has been a push beyond PCs into cell phones, but there are problems there, too. Lenovo announced that its mobile handset division suffered a 6% drop in sales for the quarter.
The Lenovo folks are trying to put a good spin on this, of course. Sentence three of the company’s statement to the press boasts that the company’s overall sales grew approximately 8%, “ahead of the industry average of approximately 7 percent.” One problem. According to IDC, that’s not quite true. In mid-January, IDC announced market figures for the same period. First words of that press release: “Worldwide PC shipments grew by 8.7% in the fourth quarter of 2006.” In other words, Lenovo’s sales actually were worse than the industry average.
BusinessWeek’s team of Asia reporters brings you the latest insights on business, politics, technology and culture from some of the world’s biggest and fastest-growing economies. Eye on Asia’s bloggers include Asia regional editor Bruce Einhorn, Tokyo reporter Ian Rowley, Korea bureau chief Moon Ihlwan, Asia News Editor and China Bureau Chief. Dexter Roberts, and Hong Kong-based Asia correspondent Frederik Balfour.