As Huawei gears up for its global PC push, what will the impact be on Lenovo and other rivals? Technology Business Research Analyst Jack Narcotta takes a look.

HAMPTON, N.H. – Huawei’s lower average sales price for premium PCs will force Dell Technologies, HP Inc. and Lenovo to respond in kind, complicating efforts of those companies to offset the impact of increased PC component costs, especially memory and solid-state hard drives.

These three companies have, to varying degrees, articulated plans to raise PC ASPs to stabilize margins. Huawei’s entry into the PC market disrupts and undermines those plans, loosens the grip of these vendors on the global PC market, and blocks these vendors from capitalizing on opportunities in China’s and APAC’s PC market.

A new competitor in the premium PC space will stall some of the market momentum enjoyed by Dell Technologies, HP Inc., Asus and Apple, and rob these vendors of revenue and profit. Huawei occupying 5% of the global PC market would represent a shift of nearly $5 billion in revenue to a new vendor, and as Huawei’s market share grows over the next five years, the revenue drain will intensify.

A likely near-term outcome of this revenue shift is smaller OEMs, such as Acer, Fujitsu and Toshiba, are forced out of the PC business. Acer does not possess the financial means or manufacturing scale to combat another larger, stronger competitor in the premium PC space.

Fujitsu, already in talks to form a PC joint venture with Lenovo, will shifts its focus to its cloud, data center and services businesses, and Toshiba will elect to finally exit the PC market in which it has languished over the last two years.

Asus’ strength in gaming PC markets somewhat insulates it from Huawei’s moves, but Asus’ mainstream consumer notebook PC business will be disrupted. In the longer term, as Huawei’s PC business gains scale in China, Dell Technologies, HP Inc., Lenovo and Apple will encounter much stronger competition in APAC, with Lenovo the most affected, as the bulk of its PC revenue is generated by China.

As with its smartphone business, Huawei has proved the U.S. is not a requirement for success.

Head-to-head competition in the U.S. will not be common for most vendors, but it does amplify the degree to which Dell Technologies, HP Inc., Lenovo and Apple will rely on the U.S. for PC revenue, as addressable markets outside the U.S. for these vendors, especially in APAC, shrink.

(C) TBR