Lenovo, IBM target Africa for growth with new initiatives
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Morrisville, N.C. — Emerging markets in Africa are the latest targets for growth by Lenovo and IBM (NYSE: IBM).
Lenovo is rolling out smartphones in new markets. The news follows Lenovo's $2.9 billion purchase of Motorola Mobility as part of its strategy to grow its smartphone business worldwide.
Meanwhile, IBM plans to invest $100 million in "Watson" supercomputer efforts. That news follows a recent announcement of a $1 billion Watson effort.
Lenovo's New Drive
Lenovo plans to expand its smartphone business in three west African countries this year as it builds on a surge in demand in Nigeria.
The company will sell models of data-enabled phones including the Vibe X, S650 and S930 in Nigeria starting in the first week of March, Graham Braum, Beijing-based Lenovo’s general manager for Africa, said in a Feb. 4 interview in Lagos. The company may start sales in Ghana and Ivory Coast later in the year, he said.
“Smartphones are fast becoming a primary platform for work, entertainment and social networking” in Nigeria, Braum said. Africa’s most populous nation with 170 million people is the next big market for Lenovo following a “successful” entrance in the United Arab Emirates and Saudi Arabia, he said.
Lenovo agreed to buy Google Inc.’s Motorola Mobility phone unit for $2.91 billion last month as it builds up its smartphone business to offset dwindling PC sales. The deal creates the world’s third-biggest smartphone vendor, behind Apple Inc. and Samsung Electronics Co., both of which already sell phones in Nigeria.
Lenovo is assessing Ghana and Ivory Coast and hasn’t set a time for when it will begin to sell phones there, Braum said.
“We have a road map in 2014 to move into countries like Ghana and Ivory Coast and in order to do that we are doing a lot of investigation in the background,” he said. The company wants to add more countries in the region in 2015, he said.
Lenovo shares gained 2.4 percent to HK$8.62 at the market close in Hong Kong, paring this year’s decline to 8.6 percent. About 92 million shares traded, or 1.7 times the three month daily average.
Nigeria had 156 million mobile-phone subscriptions as of October 2013, according to the Nigerian Communications Commission. With many subscribers owning more than one phone, user numbers will probably grow to more than 200 million in 2017, London-based research company Informa Telecoms & Media estimates.
While Lenovo is entering the Nigerian smartphone market after many of its competitors, it’s confident that customers will accept its phone brands in the same way they did its PCs, which have a 14 percent market share, according to Braum.
“We want to be one of the five top players within the next 12 months,” he said.
Lenovo’s competitors include BlackBerry Ltd., Nokia Oyj and Tecno Telecom, while China’s Huawei Technologies Co. released its Ascend P6 smartphone in Nigeria in September in an effort to double its annual sales in the country to 200,000 units.
Lenovo is offering seven phone models to attract a wide range of Nigerian customers with features such as front and rear cameras, Braum said.
“While the PC market still represents a $200 billion opportunity and offers substantial opportunity for profitable growth, most of the new growth will be in the PC Plus market, which includes tablets and smartphones,” he said, referring to the global market.
Lenovo operates its global executive headquarters in Morrisville and employs some 2,100 people in the Triangle.
- IBM Takes Watson to Africa
IBM is raising its bet on Africa by spending $100 million to bring its Watson technology to the continent.
The world’s biggest computer-services provider plans to introduce Watson, an artificial-intelligence system best known for beating humans on the “Jeopardy!” game show, to government agencies, universities, scientists and other partners in Africa to process socioeconomic information, the company said in a statement. It will also establish a research center to help advance a 10-year IBM initiative to spur development.
The moves are part of an effort by Chief Executive Officer Ginni Rometty to make the continent into a growth engine for IBM, which has reported seven consecutive quarters of falling revenue. Last year’s 5 percent sales decline in its traditional growth markets of Brazil, Russia, India and China helped drag down total revenue.
In Africa, “we’re getting more partners and we’re helping the economic development,” Solomon Assefa, an IBM researcher, said in an interview. “Africa is really moving forward. We believe that this investment reflects that it’s also a very good business decision.”
IBM will be expanding its investment in Watson as the Armonk, New York-based company looks to data analytics to boost growth. IBM said last month that it will spend $1 billion to create a new division around Watson, which analyzes troves of data and can answer questions in conversational language.
Last year, the company opened a research laboratory in Nairobi, Kenya, its 12th in the world. In 2013, IBM had operations in more than 20 African countries, up from four in 2006.
Watson can analyze large amounts of data after the information is uploaded to the tool. Assefa said IBM’s new research center, the Center of Excellence for Data-Driven Development, will serve as a central point for universities, government agencies and other partners to upload data. Assefa declined to comment on partners for the project.
Health care and education will be two initial focus areas for which IBM intends to deploy the Watson technology, he said.
IBM employs some 9,500 people across North Carolina.
[LENOVO ARCHIVE: Check out eight years of Lenovo stories as reported in WRALTechWire.]
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