Still a force

China Daily (Canada) - - HONG KONG -

What a dif­fer­ence a year can make in the tech world. Chi­nese main­land com­puter gi­ant Len­ovo was the dar­ling of in­vestors af­ter it re­ported healthy growth in profit and rev­enue. The com­pany’s com­mand of the global mar­ket’s largest share for per­sonal com­put­ers seemed unas­sail­able and sales of its smart­phones in the highly com­pet­i­tive Chi­nese main­land mar­ket were brisk.

Len­ovo is now the fa­vorite tar­get of mar­ket short sellers.

As the world’s largest com­puter pro­ducer, it was seen to have been hard­est hit by the down­turn in global de­mand for per­sonal com­put­ers. At the same time, the com­pany was widely be­lieved to be fall­ing way be­hind ri­vals Xiaomi and Huawei in smart­phone sales on the Chi­nese main­land.

Ear­lier this month, Len­ovo posted earn­ings of $105 mil­lion for the first quar­ter of 2015 — down 51 per­cent from a year ago — while rev­enue rose by 3 per­cent to $10.7 bil­lion, which was be­low fore­casts.

The com­pany said it had been fac­ing the “tough­est mar­ket en­vi­ron­ment for years” and an­nounced 3,200 job cuts to save costs.

In its profit an­nounce­ment, the com­pany noted, in par­tic­u­lar, the sharp de­cline in smart­phone sales, which came as a big dis­ap­point­ment fol­low­ing its ac­qui­si­tion of the Mo­torola brand from Google for $2.9 bil­lion last year, specif­i­cally to its mar­ket po­si­tion.

Len­ovo had gone though tougher patches be­fore, but it man­aged to re­cover ev­ery time by lever­ag­ing on its man­u­fac­tur­ing prow­ess and the com­pre­hen­sive sales net­work on the Chi­nese main­land — the world’s largest mar­ket for per­sonal com­put­ers. What Len­ovo lacks is de­sign flair. The com­pany pro­duces some of the best per­sonal com­put­ers at var­i­ous price points. Its flag­ship prod­ucts have con­sis­tently won rave re­views in tech mag­a­zines in the United States, its ma­jor over­seas mar­ket. But none of its prod­ucts can ex­cite buy­ers as much as those pro­duced by Ap­ple. Even Dell, another main­stream com­puter maker, has come up with oc­ca­sional mod­els that fig­u­ra­tively set the mar­ket on fire.

Of course, the time­less ThinkPad form fac­tor that has distin­guished Len­ovo’s prod­ucts for many years has re­mained pop­u­lar with cor­po­rate users.

But the de­sign of the com­pany’s con­sumer line of prod­ucts has never quite caught on. What’s more, the com­pany’s bet­ter-de­signed prod­ucts are ei­ther too ex­pen­sive or un­der spec.

As a gad­get freak, I bought the com­pany’s U model years ago in Shang­hai when it first came out just for the de­sign, which, to me at least, doesn’t look out­dated even now. But it cost con­sid­er­ably more than ma­chines with the same specs and it’s heavy by to­day’s lap­top stan­dards.

Although it’s slow and clunky, I still use my Len­ovo lap­top regularly be­cause of its ex­cel­lent key­board.

But its bat­tery life is too short and the de­vice is too heavy to be car­ried on a trip. De­spite its flaws, the ma­chine shows what Len­ovo can do if it sets its mind on do­ing it.

So all short sellers be­ware!

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