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Wireless Internet devices to dominate future sales, Lenovo CEO says

Yang Yuanqing

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MORRISVILLE, N.C. -— Lenovo Group expects wireless Internet products to account for up to 80 percent of its sales within five years as it pursues expansion in faster-growing emerging markets, CEO Yang Yuanqing said Friday.

Lenovo, the world's fourth-largest personal computer maker which bases its global headquarters in Morrisville but has most of its operations in Beijing, jumped into the mobile Internet market in January with the unveiling of a smart phone and two Web-linked portable computers.

"Mobile Internet is very important," Yang said in an interview with The Associated Press in Beijing on Friday. "Even today, notebook sales already are higher than desktops. Mobile Internet products are going to be 70 to 80 percent of our sales ... within three to five years."

In an interview with Dow Jones, Yang also said Lenovo is on the lookout for possible acquisition targets in the mobile Internet space as well as consumer PC markets and in developing markets.

Yang’s comments about the mobile Internet reflected those made by his boss a day earlier.

On Thursday, Liu Chuanzhi, chairman of the parent Lenovo Group conglomerate and Lenovo, also stressed a mobile Internet strategy. He told the China Daily that Lenovo would launch a combination cellphone and laptop device will be launched in April.

The mobile device “could replace the major function of computers,” Liu said.

He declined to disclose any specifics about the unit.

Liu has also said Lenovo will introduce a tablet PC, the China Daily added.

The new phone/laptop combination fits in with a strategy at Lenovo, the world’s No. 4 PC maker, that puts more emphasis on the mobile Internet market.

Yang said Lenovo plans this year to focus on promoting mobile Internet and sales in emerging economies in Asia, Latin America and Eastern Europe.
In an earlier interview, Yang told Reuters that Lenovo’s repurchase of its former mobile phone unit in China last year and launch of a new smartphone is part of a strategy to capitalize on growing use of mobile devices to use the Net.

Lenovo was hit hard by the global crisis, which prompted its core corporate customers to slash spending. It suffered three losing quarters before rebounding to a profit in the second half of last year.

Yang said Lenovo's longer-term strategy, dubbed "protect and attack," calls for building up its dominant presence in China. The country accounts for nearly half of Lenovo's global sales but it faces competition from industry leaders Hewlett-Packard Co. and Dell Inc., which are creating products tailored to Chinese customers.

In the latest quarter, Lenovo said sales in India and other emerging markets rose 52 percent over a year earlier, far ahead of the 13 percent sales growth reported for the United States and Western Europe.

Lenovo, which acquired IBM Corp.'s PC unit in 2005, says its global market share last year rose to 9 percent, its highest level to date.

Yang said Lenovo has no plans for foreign acquisitions but is ready to look at any deals that fit its strategic plans.

Corporate spending on computers has yet to rebound but companies are expected to step up purchasing in the second half of this year, Yang said. He said he could not foresee when global PC sales might recover to pre-crisis levels.

"I'm not an economist," he said. "Even for economists, it's difficult to forecast."

On Thursday, Yang noted Lenovo’s phone launch and other devices at the Consumer Electronics Show in Las Vegas in January. Among the new products is a so-called smart laptop that automatically navigates connectivity between WiFi and cellular networks.

"We launched a number of mobile Internet products at CES and we'd like to be more productive in the segment," Yang told Reuters.

He also remained confident Lenovo would gain more market share in its home base of China.

"The Chinese market is growing very fast," he said. "I'm confident we can grow our market share."

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