How Lenovo became No. 1 in PCs

July 11, 2013: 7:48 AM ET

The Chinese tech company is one of the biggest companies in the world.

 Lenovo's Yuanqing Yang

Lenovo's Yuanqing Yang

FORTUNE -- As widely expected, China's Lenovo this week emerged as the world's top purveyor of personal computers, according to new reports from two research firms. Both Gartner and IDC say Lenovo's market share in the second quarter of 2013 hit 16.7%. Lenovo unseats longtime No. 1, Hewlett Packard, whose share fell to 16.3%, Gartner says.

Lenovo had another reason to celebrate this week: The company climbed 41 spots to No. 329 on the Fortune Global 500Fortune's ranking of the world'd largest corporations. Lenovo is one of 89 China-based companies on the list.

Lenovo's share gains come amid a slowdown in the global PC business. IDC and Gartner show continued declines in second-quarter shipments (11.4% and 10.9%, respectively). Indeed, Lenovo's total shipment of computers fell slightly, but because rivals such as HP (HPQ), Dell (DELL), and especially Acer and Asus, saw even greater declines. Lenovo's share of the overall market -- 75.6 million units in the quarter -- edged up.

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The industry's struggles are not lost on Lenovo CEO Yuanqing Yang. During a panel at the recent Fortune Global Forum in Chengdu, Yang underscored the need for Lenovo to conquer other categories. "We set a strategy to become not just a PC player, but also a PC-plus player. So we must win in the tablet area, in the smart phone area," he said.

But unlike HP, which has sometimes wavered in its commitment to personal computers (remember when HP mulled, then reversed, a plan to exit the business? ) Lenovo continues to be a big believer in the category. Yang told Fortune senior writer Miguel Helft: The "PC definitely will not die." (Read the entire story here. Subscription required.)

What sets Lenovo apart from the other Chinese companies on the Global 500 ranking is the diversity of its revenue. Many Chinese state-owned enterprises rely almost entirely on domestic sales. Lenovo and telecom equipment maker Huawei (No. 315), are private companies, and they successfully sell their products around the world. The Lenovo brand is the top choice among Indian consumers considering a PC purchase, for example.

China, of course, remains an important market for Lenovo -- and its competitors. Last month HP announced a big management reorganization. CEO Meg Whitman reassigned longtime PC chief Todd Bradley to a new strategy role. The company specified that he is responsible for enhancing HP's business in China.

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Stephanie Mehta
Stephanie Mehta
Deputy Managing Editor , Fortune

Stephanie N. Mehta is the deputy managing editor at Fortune, overseeing technology coverage for Fortune. She also is a co-chair of the annual Brainstorm Tech conference, an annual gathering of tech and media thinkers. Previously, Mehta spent seven years as a tech writer at Fortune covering the telecom and media industries. She also has worked for the Wall Street Journal and the Virginian-Pilot in Norfolk, Va.

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