The PC market is not dead yet and there is still growth opportunities in very large enterprises and small- and medium-sized enterprises, said Lenovo’s regional head.
“Will there be growth in the consumer segment, maybe. Driving the growth on the PC side and continue to have a strong profitability on the PC side is our strategy. Today that is what is holding the company and feeding the financial needs of our other businesses,” Francois Bornibus, President for Europe, Middle East and Africa (EMEA), and Vice-President of Lenovo Group, told Gulf News in an exclusive interview.
The PC performance has been good in EMEA. Two years ago, he said the PC market declined but now the market is slightly recovering and not declining any more. In the consumer segment, the market is down but the commercial sector is growing.
In EMEA, Lenovo’s PC revenues grew 15 per cent year on year in the third quarter despite flattish overall market. Revenues grew 7.6 per cent year on year globally, and up 10.4 per cent from the second quarter.
“In EMEA, combining PC and tablets together, we are number one in EMEA but if you look only at PC, we are number two. Our ambition is to become number one in EMEA but we have some more work to do. We want to reignite the growth in terms of market share. In EMEA, we are number one in consumer, number one in large accounts and number three in SMEs,” he said.
Growth in Lenovo’s PC revenue in the third quarter
Lenovo’s market share in the SME sector
In SMEs, he said that Lenovo has a 16 per cent market share while others have 35 per cent.
“We have a huge opportunity for growth in SMEs. We have a very good business in the PC organisation but we have to grow the other businesses we have. That is mobile and servers. What we have to do is grow these businesses and we have to use the big part of the engine — PC — to support mobiles and servers,” he said.
70 per cent of Lenovo’s revenues come from PCs, 20 per cent from mobile phones and 10 per cent from servers in terms of revenues.
We want to reignite the growth in terms of market share. In EMEA, we are number one in consumer, number one in large accounts and number three in SMEs.”
- Francois Bornibus | Lenovo president for EMEA and Vice-President of Lenovo Group
However, he said that server business has been difficult for the past two years.
“We had made a mistake by putting one sales representative to manage the PC and server business. One and a half years ago, we split the PC and server business, even though it is under one umbrella. The salesforce addressing the PC and server business are separate now.
“What we are seeing is that the server business is now growing. Globally, we grew around 10 per cent in revenue in the third quarter and in EMEA level, we grew 29 per cent and in MEA, we grew around 70 per cent,” he said.
Moreover, as large enterprises and SMEs are now moving to the cloud, he said that Lenovo has more growth opportunities in the cloud business, as “we are a challenger and can take bets. We still have work to do.”
Despite Lenovo’s acquisition of Motorola from Google for $2.91 billion in 2014, its mobile division has not turned profitable yet.
“Our strategy is to consolidate the R&D teams of Motorola and Lenovo and come out with one product instead of two brands. The phone business is dependent on where you are. The challenge is the transition from Lenovo to Moto brand,” he said.
He said the Lenovo phones are sold mainly in China, Asia Pacific, Middle East and Russia. Motorola brand is extremely strong in the US, Latin America and Western Europe.
“Becoming profitable is easy, just focus on the market where there is profits. What we are looking at it is a balance between both profitable and growth (volume). We still need to decide how to prioritise the phone business whether we need to sell everywhere or in certain countries and how to develop the Moto brand,” he said. MEA contributes 33 per cent to the total EMEA mobile phone market.