Why Lenovo's surging mobile sales shouldn't freak out the PC faithful
Something ominous occurred earlier this week: Amid all the talk about the Windows 8.1 release date, Lenovo quietly announced that it shipped more mobile devices than desktops and laptops in the second quarter.
Lenovo sells more computers than any other company, so that’s a mighty big feat indeed.
Good for Lenovo, right? Right. But beyond that one company, what does it mean when the world’s top PC manufacturer sells more tablets and smartphones than it does traditional computers? Is this yet another sign of the impending demise of the PC? Are we entering an era that will be dominated exclusively by smartphones and tablets?
Not so fast: The PC isn’t dead yet. It’s just not the blazing solo star it used to be.
PCs still rock, especially at Lenovo
Lenovo didn’t provide any specific numbers about just how many smartphones and tablets it shipped, and the exact split between traditional PCs and mobile devices isn’t concretely clear. That said, estimates from Gartner and IDC put the difference at a scant 300,000 units (12.9 million PCs to 12.6 million mobile devices).
“Lenovo’s PC shipments were still pretty strong,” says analyst Tim Bajarin, president of Creative Strategies. The popularity of the business-focused ThinkPad brand, combined with the consumer-centric IdeaPad line-up has buoyed Lenovo’s computer business, he says.
Despite shipping fewer PC units than mobile devices, however, desktops and laptops still make up a whopping 79.8 percent of Lenovo’s total revenues. Indeed, the company’s Mobile Internet Digital Home division—responsible for smartphones, tablets, and Smart TVs—made up just 13.7 percent of all money taken in by the company between April and June.
Lenovo’s smartphones and tablets may have just squeaked by PC shipments, but when it comes to the bottom line, the company’s PCs are still firmly in the driver’s seat.
Canary in the coal mine?
But beyond all the talk about dollars and cents, what does Lenovo’s shift means for the rest of the PC industry? That’s a hard call.
Lenovo is the only major PC producer that is also big player in smartphones and tablets. The widely diversified portfolio definitely gives Lenovo an edge over its major PC competitors, says Bajarin, especially in the enterprise space, where having a full range of mobile devices and PCs can help secure juicy corporate contracts.
After Lenovo, the next biggest PC vendor is Hewlett-Packard, a company that keeps talking about getting back into the smartphone game and increasing its push into tablets. But short of the dirt-cheap Slate 7 and a single high-end Windows tablet, HP remains solidly a notebook and desktop company.
As you look further down the PC top five, Dell hasn’t done much to excite buyers with its attempts at tablets and smartphones. The Taiwan-based titans Acer and Asus both produce smartphones, but are better known for their Android tablets. Both companies are top five tablet vendors worldwide and shipped a combined 3.5 million tablets last quarter, according to IDC.
The rise of “anytime-anywhere computing”
Where things start to get really interesting, however, is when you look at the top 5 smartphone vendors in the world. That’s where you start to see firms that are more like Lenovo, particularly Samsung and Apple.
“When you combine PCs, tablets, and smartphones all together into one category, Apple and Samsung are dominant,” says Bob O’Donnell, IDC’s vice president for clients and displays. IDC has recently been tracking this super category called “smart-connected devices,” while Gartner calls the mega-grouping “anytime-anywhere computing.”
Apple’s iPhone has routinely outsold the Mac since the iPhone 3G came out in 2008. Samsung doesn’t rank as a top five PC producer, but is hugely popular in the mobile world thanks to its line-up of Galaxy smartphones and tablets. Below those two market leaders, you tend to see a mish-mash of multiple brands—or as O’Donnell put it, “a lot of noise” where it’s hard to discern much of anything.
But over the last two quarters, O’Donnell says, Lenovo started breaking out to become the world’s third largest smart-connected device company behind Apple and Samsung. Lenovo’s gains are just a reflection of the fact that Lenovo wants to be a relevant device player and that means being a major player in all three categories, according to O’Donnell.
One world, many screens
In the wake of his company’s stunning second quarter results, chairman and CEO Yang Yuanqing declared that Lenovo is “rapidly transforming…into a PC-plus business”—not a “Post-PC” business.
That’s the real takeaway here. Sure, the traditional PC market is hemorrhaging, and, yes, the mobile device market is exploding. But no matter how you slice it, both segments sell hundreds of millions of units year-in and year-out, and all of these slates and smartphones and desktops and laptops and flipping-flopping-bending hybrids just plain fall under the general umbrella of all-around computing.
When you look at it in that light, Lenovo hasn’t really done anything significantly differently than Apple and Samsung, the connected device leaders.
Yes, the fact that the world’s top PC maker sells more mobile devices sounds scary on the surface, but Lenovo’s only picking up on a trend where the PC isn’t necessarily deposed by slates and smartphones—it just plays a somewhat equal part in an increasingly larger universe of devices.