Beijing: China’s Lenovo Group Ltd, the world’s biggest personal computer manufacturer, is positioning itself to be the driving force to disrupt the top two smartphone makers — Samsung and Apple — in the market.
“We can challenge the two players in the market with the Motorola acquisition and we are the only one who can,” Lenovo’s chairman and CEO Yang Yuanging, told Gulf News.
Regarding the Motorola acquisition, he said: “we have better synergies between the two companies and can lower management costs, and Lenovo can turn round Motorola into profitability in four to six quarters after the acquisition.”
The Chinese firm said in January that it was buying Motorola from Goggle for $2.9 billion (Dh10.6 billion).
The deal is awaiting approvals from US, China and EU authorities and is expected to be closed before end of the year.
Lenovo is facing stiff competition in the Chinese smartphone market and warns of slower growth due to branded and domestic manufacturers. The Chinese market has become “more matured.”
Lenovo is the second largest smartphone manufacturer in China after Samsung.
“I see China as the most fiercely competitive smartphone market in the world and it is very different compared to other parts of the world. Manufacturers are struggling to make money as margins are very low,” he said.
Lenovo can achieve “higher margins” as competition is less fierce outside China.
For example, he said that Apple has 40 per cent market share in the US but in China, they have only single digit market share.
The industry is shifting from high-end smartphones to low end and Motorola deal is “perfect for Lenovo’s strategy and we got it for a good price,” he said.
The company’s worldwide smartphone shipments grew 63.3 per cent in the first quarter of this year to 12.9 million units, according to a research firm IDC. Lenovo is ranked fourth after Samsung, Apple and Huawei.
By combining Motorola’s shipments, Lenovo will become the third largest player.
The company sold 50 million smartphones and 55 million notebooks and desktops last year and expects to sell 80 million smartphones and 20 million tablets this year.
On whether Lenovo has the money for acquisitions, he said Lenovo has raised $1.5 billion through bond sale and has $4 billion cash in hand. That money will be used for the purchase and other small acquisitions.
Yang said that Lenovo would focus for the time being on the US acquisitions and would not be looking for other big purchases as we don’t have the resources and the energy to manage big acquisitions.