Editor’s note: Beau Skonieczny is a research analyst in the computing practice at Technology Business Research.

HAMPTON, N.H. – Lenovo is now the second-largest PC vendor in the world.

Lenovo continued to outpace the market for traditional PC sales, claiming to have passed Dell to sell the second highest number of PCs and to have exceeded HP’s commercial notebook sales to place first in that category.

Lenovo’s improved positioning in the global PC space was driven by a 37.8 percent year-to-year growth in overall desktop sales combined with a 29.6 percent growth in notebook sales over the same period to achieve total corporate revenue of $7.79 billion in 3Q11. (Read more about the earnings report here.)

The company was also able to sustain healthy margin performance despite pressure from Lenovo’s expansion in the consumer electronics space. TBR believes Lenovo’s investment in the consumer space via the acquisitions of Medion and NEC will contribute to a greater mix of consumer PC sales, which will help drive further market-share gains. The increased mix of consumer sales will place further margin pressure on the company going forward.

“Protect and Attack”

Lenovo, utilizing its “protect and attack” strategy to protect markets such as China while at the same time attacking rivals there and elsewhere, thrived in a challenging market, where global economic uncertainty continues to influence slower consumer and commercial spending. A continuing focus on emerging cities within China helped Lenovo generate a record 31.5 percent share of PC sales in the region, strengthening its lead among local PC vendors.

Lenovo continued to successfully attack emerging markets, where the company grew PC shipments 37.9 percent year-to-year, claiming to outpace the industry by more than three times. Lenovo is capitalizing on high growth PC markets such as Brazil, India, Latin America and Russia. As Lenovo continues to gain brand awareness through new product promotions, TBR believes emerging markets will be a key region for sales of Lenovo’s mobile internet devices, particularly as many consumers in emerging markets are choosing handsets and tablets over more expensive laptops due to limited discretionary funds.

Despite the slow growth of mature market PC demand, Lenovo was able to generate a 54.6 percent growth in PC unit shipments year-to-year in mature markets, due primarily to the prior acquisition of Medion and the NEC joint venture. TBR believes organic growth in mature markets is largely due to increased SMB penetration, as Lenovo continued to demonstrate its dominance in the commercial notebook space by taking the number one market position world-wide. The introduction of new business class notebooks, such as the U300s Ultrabook, will help Lenovo further penetrate the commercial notebook space while also retaining margin health due to the higher premiums for SMB products.

Brand Awareness

Lenovo continues to build band awareness through aggressive marketing and new product promotions. Investment in brand awareness through Lenovo’s recent “For Those Who Do” promotional campaign has proven fruitful, helping the company establish a foothold in the U.S. market among the top five PC vendors. Lenovo is investing aggressively in new products such as Ultrabooks and all-in-one PCs to continue to penetrate the SMB space and sustain the company’s growth trajectory in the long term.

Lenovo is enjoying strong demand for its mobile internet devices, particularly in China where the company has established the number two position in tablet shipments. In addition, Lenovo is gaining traction in its core markets with smartphones, especially the LePhone A60, which headlined smartphone growth in 3Q11, driving sales up 335.2 percent year-to-year. While Lenovo’s international presence in the tablet and handset market lags competitors like Samsung and Apple, TBR believes aggressive product investment and global marketing initiatives will help Lenovo establish traction with its LePads and LePhones as the company continues to push into markets outside of China.

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