Sales of "smart devices" (including phones, tablets, and PCs) rose by 41% in over the past year, Lenovo said in reporting its first-quarter results (net profits up 23%; revenues up 9.7%). Sales of smartphones alone soared by 132%. That rise is thanks largely to growth in China, the company's home country. Lenovo said in May that it plans to introduce smartphones in the U.S. within a year.
This all happened even as Lenovo was becoming the world's top seller of PCs. But that's happening in a shrinking market, and Lenovo's PC sales are declining along with pretty much everyone else's. Margins are up, though, because Lenovo is concentrating on the high end. "If you can't drive growth, you should pay more attention to margins," CEO Yuanqing Yang told the Wall Street Journal.
"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 smartphone area," Yang said in June at the Fortune Global Forum in Chengdu. A few weeks before that, Yang told Fortune that the "PC definitely will not die."
Thus, Lenovo is playing both ends of the PC-mobile divide. It's concentrating on high-end PCs not only because of the margins, but because that's where the market is going -- away from the mainstream and toward power users in offices and homes. Mobile devices are where the mainstream action is at, at least for now. As mobile devices continue to more closely resemble what we think of as "PCs," the distinction will continue to blur.
The Chinese tech company is one of the biggest companies in the world.
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 MOREStephanie N. Mehta, Deputy Managing Editor - Jul 11, 2013 7:48 AM ET
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