Chinese brand’s ambitious SA cellphone plan
Lenovo will bring ‘phablet’ and Motorola range to a mall near you before the end of the year
LOUD AND CLEAR: Lenovo CEO Yang Yuanqing speaking at a Beijing tech conference in January THE world’s No 1 PC maker has recommitted itself to taking on the smartphone market, and will include South Africa in its new strategy.
“The strategy and vision is very clear,” said CEO Yang Yuanqing during the Lenovo Tech World conference in San Francisco. “We must expand from PC to smartphone and infrastructure, and we must win these two markets. The smartphone market is even bigger than the PC. And the more people use smartphones, the more back-end infrastructure there will be.”
In 2014, Yang said he wanted Lenovo to be the biggest player in the smartphone market within two years — a target the company has not met. Asked what went wrong, he was frank about the challenges of the company’s home market.
“Our problem is in China,” he told Business Times. “Outside China the smartphone business is doing very well. Last year we sold 50 million units worldwide. The problem is that, in the past, we mainly relied on operators to do business, and we benefited from subsidies to users.
“Two years ago, all operators in China cut their subsidies, so the market mix of phones sold through operators dropped from more than 50% to less than 30%. The rest of the market was all low-end product. We decided not to compete in that low-end market, and shifted from lowend to premier and mid-range product, and shifted from the operator market to the open market.
“That had a significant impact on our volume, so our China business declined by more than 85% in the last quarter. But this is a strategic shift. When we start to build a foundation in the open market with our competitive pricing, we can win more market share in China.”
He said that although the smartphone market was mature, it would keep growing, in contrast to the flattening PC market. Moreover, it was worth twice as much as the PC market.
The consequence is that, in many markets, the Lenovo business is being restructured to increase emphasis on smartphones. It will open a smartphone division in South Africa next month, and bring Lenovo phones to the country for the first time in the third or fourth quarter of this year.
The Motorola brand, which Lenovo bought in 2013, will be targeted at the upper end of the market, while Lenovo phones will aim at the mid-range segment.
“We need to have the right focus,” said Oliver Ebel, Lenovo vice-president and general manager for the company’s Europe, Middle East and Africa smartphone division.
“We will have dedicated people in Africa as well as South Africa for the smartphone business, starting on July 1. We’re investing in a team to ramp up the phone business, and will be appointing a new country head who will do the whole of Africa, but from South Africa.”
Ebel confirmed that the new Motorola phones unveiled in San Francisco, the Moto Z and Moto Z Force, along with the new virtual-reality-oriented Lenovo Phab 2 Pro “phablet”, will be launched in South Africa in the second half of the year.
“We are looking for the different price points to find the sweet spot. The Moto is aimed at people who are looking for a premium smartphone but want something new or different; they want an alternative to the existing high end.
“South Africa is a good market for entry- to mid-tier phones. But because of the operator model here, the high end is also accessible to many people.”
Ebel said Lenovo was not yet targeting a specific market share, but wanted to build its presence step by step. “We want to become one of the top three smartphone players here.”
Graham Braum, general manager for Lenovo Africa, said the company had a strong heritage of innovation, from wearable devices through the PC to highend server architecture. However, new concepts and ecosystems addressed a requirement from consumers for mobile technologies.
Braum said other new technologies announced at Lenovo Tech World, such as the Moto Mods ecosystem, which allows add-on devices to be snapped onto the Moto Z family of smartphones, would transform the mobile experience.
We want to become one of the top three smartphone players here