Lenovo Sets Sights On Topping PC Market

Fast-forward five years and, if Yuanqing Yang has his way, Lenovo will be the world's largest PC company, fueled by double the growth of its rivals.

At a press and analyst day in New York on Tuesday, CEO Yang said Lenovo will focus on building out its market share in emerging regional markets, such as China, India, Brazil and Russia. Emerging markets account for 53 percent of the company's current growth, with Brazil and Russia producing 50-plus percent growth rates year-over-year. The company is also moving to solidify its midmarket footprints in the established markets of the United States and Western Europe, where it reports 98 percent of its customers say they're satisfied with Lenovo's products.

"If we could successfully execute our strategy, we are confident that in five years, we will have the most successful brand in the world," Yang told an audience of journalists and analysts. "Our market share will be significantly higher, and we will be very healthy and profitable. To reach that profit, we will rely on our successful business model."

Channel partners, particularly in the North American market, will play a key role in Lenovo's growth strategy. Yang says Lenovo's channel partners are closest to its customers, and therefore are instrumental in determining customer needs, delivering products and ensuring customer satisfaction.

"Our dependence on our business partners will increase over time," said Deepak Advani, Lenovo's chief marketing officer.

Lenovo rocketed to the world IT stage six months ago when it acquired IBM's ThinkPad laptop division. It was already the largest desktop manufacturer in mainland China.

Key to Lenovo achieving its goals is its ability to replicate its successful business model in China. There, Lenovo divides its customer base into two camps: relationship and transactional. Relationship customers buy computers infrequently and aren't necessarily interested in cutting-edge technology. Transactional customers tend to be institutions that want customized, standardized products with adjustable pricing, immediate availability, dependability and reliability, and superior service.

Yang says growth is dependent on expansion of its transactional base, which currently accounts for 25 to 30 percent of its business. He hopes it grows to 50 percent or more.

"Customers and customer satisfaction is the most important metric for us. When you have maniacle focus on serving customers, revenue and customers and growth follows," Advani said.

Many say the PC and laptop markets are commoditized. While Hewlett-Packard CEO Mark Hurd says his company's PC business is healthy, some competitors have shown weakness in their PC divisions. Meanwhile, Acer is showing signs of a resurgence as its builds out a new foundation in Europe, and stalwarts Toshiba and Gateway continue to maintain ground in their market shares.

Lenovo believes it can beat the competition through smart innovation. In fact, the company's internal branding motto is "Innovation that matters."

Lenovo executives say competitors claim to be innovative, but they're really innovating on features that don't have practical use or matter to the user. Its strategy is to produce innovative products that have practical uses or benefits, such as the new Z-series ThinkPads, which feature a "role cage" feature similar to crumple-zone protection in automobiles. Should a user drop a laptop, the reinforced role gage will protect the laptop and its data-holding components from damage.

"Innovation isn't just about the latest and greatest widget; innovation matters in how you use the technology, how you deliver the technology and how you service the product," said Dr. Peter Hortensius, Lenovo's senior vice president of worldwide product development.