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Local Tech Wire

MORRISVILLE, N.C. – Restructuring, refocus, streamlining and the launch of a broad array of new products continues to lift PC sales at

The world’s No. 4 PC maker, which bases its headquarters in Morrisville, is increasing its global market share as 2010 begins. And the latest good news comes even before the impact can be felt from a critically acclaimed lineup of new models including “smart books” that Lenovo introduced at the International Consumer Electronics Show last week in Las Vegas.

Lenovo’s fourth quarter shipments soared to 7.87 million, up a whopping 41.8 percent from a year ago, according to new statistics from analysis firm IDC.

For the year, Lenovo’s market share increased nearly a full percentage point to 8.5 percent from 7.6 percent with shipments hitting nearly 25 million. Lenovo is fourth behind HP (20.3 percent), Dell (13.1 percent) and Acer (13 percent).

A global boon in demand helped all the major manufacturers increase sales the last quarter of the year, reported Thursday.

“The market has weathered a storm which looks to be behind us,” said Jay Chou, a research analyst for IDC’s Worldwide Quarterly PC Tracker.

Falling prices helped trigger the demand, especially in the U.S. where sales soared 24 percent from the fourth quarter of 2008. IDC said U.S. shipments set a record of nearly 20.7 million machines.

However, IDC noted that the increase in sales came at a cost for PC makers – what it called “price cuts of unprecedented duration” for the holiday season.

That cost cutting triggered a warning from Chou.

“[S]alvaging decreasing margins will soon become even more pertinent as one considers the long-term effects of holding market share at the cost of profitability,” he said. “Without an effective strategy to convey a clear usage model and feature set tied to each segment, the market will inevitably continue down the slippery slope of ‘good-enough’ computing sold to the lowest bidder".

Lenovo’s surge in sales came at the close of a year in which the firm slashed staff, including in China where most of its operations are based, as well as a change in top management, a refocus on the Chinese market and a continuing series of new products.

The fourth quarter performance drove Lenovo’s global market share up to 9.2 percent, a full 1.7 percentage point increase from the previous year.

“Lenovo was able to grow well in its main markets of Asia/Pacific and [Europe, Middle East, Africa], reaping sizable overall year-on-year growth of nearly 42%,” IDC noted. “Its restructuring in Japan also seemed to have paid off as 4Q09 was the second quarter of double digit yearly growth there.”

The surge lifted Lenovo to within less than 3 percentage points of Dell, which fell to the third spot in market share last year behind Acer. Dell, which is closing its PC manufacturing plant in Winston-Salem, did increase its shipments 5.2 percent over 2009’s fourth quarter to just under 10.7 million. However, its market share fell to 12.4 percent from 13.6 percent.

Acer, meanwhile, continues to grow at a strong pace in the No. 2 spot. Acer shipments surged 28 percent to 11.5 million and its market share climbed to 13.4 percent from 12 percent.

HP remains the global leader at 21 percent market share, up 1.4 percent in the quarter with a 23.3 percent surge in shipments to nearly 18 million.

The U.S. market remains a challenge for Lenovo, however, which failed to crack the top five list in the U.S. in the fourth quarter.

HP leads at 29.2 percent followed by Dell (22.4 percent), Acer (11.9 percent), Toshiba (8.3 percent) and Apple (7.4 percent).
U.S. PC shipments surged 24 percent in the last quarter of the year to more than 20.67 million.

The industry’s performance was much better than expected. IDC, a technology market research group, had predicted global shipments would rise about 11 percent, and just 6 percent in the U.S.

The holiday period of 2008 and the first half of 2009 marked the industry’s worst stretch in several years. But then consumers’ interest in "netbooks" – tiny, inexpensive, low-powered laptops – and other cheap portable computers helped drive a turnaround, beginning with a tiny increase in shipments during the third quarter of 2009.

Consumers were again responsible for growth in the fourth quarter. Netbooks made up about 20 percent of consumer laptops shipped in the quarter, and computer makers cut prices for regular laptops even further and increased their marketing efforts, said David Daoud, an IDC analyst. At the same time, U.S. shoppers started feeling better about the economy, a shift in sentiment Daoud wasn’t expecting so soon.

Gartner Inc., a research group, estimated global PC shipment growth at 22.1 percent and U.S. growth at 26.5 percent. Gartner and IDC use slightly different methods to calculate shipments.