Lenovo aims to expand its smartphone reach across the Middle East and Africa once it has bedded down its $2.9 billion acquisition of Motorola Mobility.
This comes as Lenovo, which has 20% of the global PC market, last month wrapped up its purchase of Motorola Mobility from Google. The deal gives Lenovo the Motorola brand as well as its portfolio of smartphones, like Moto X, Moto G, Moto E and the DROID series, as well as the future Motorola product roadmap.
In a statement, the companies said this positions Lenovo as the world's third-largest maker of smartphones. Lenovo plans to operate Motorola as a wholly-owned subsidiary, and its head office will remain in Chicago.
Lenovo's moves follow a similar bid by Asus, which last month said it was assessing the local market to determine viability and demand. Country manager Jeff Kuo says, in markets in which Asus has launched its smartphone offering ? the Zenfone range ? it is doing "remarkably well", and while there are no immediate plans to bring smartphones to SA, Asus is continually assessing the landscape
Tech know-how
As part of the deal, Lenovo will incorporate almost 3 500 employees that design, engineer, sell and support Motorola's devices. "Together, we are ready to compete, grow and win in the global smartphone market. By building a strong number three and a credible challenger to the top two in smartphones, we will give the market something it has needed: choice, competition and a new spark of innovation," said Yang Yuanqing, chairman and CEO of Lenovo.
Liu Jun, president of Lenovo's Mobile Business Group, says the company expects to sell more than 100 million mobile devices this year - including smartphones and tablets. Lenovo Africa GM Graham Braum says Lenovo - which is moving to becoming an end-to-end PC maker after its purchase of IBM's X86 server business - will move on a launch roadmap after Motorola Mobility has been integrated.
Braum, speaking to ITWeb, says "there is still a lot of work to integrate the units, but there is no doubt that we will see accelerated Motorola implementation in the next few months". He notes the company, which is in second place - behind HP - in the African PC market, has invested heavily into research and development.
Attacking the market
So far, Lenovo has launched OS-agnostic smartphone products in Dubai, Saudi Arabia, Nigeria and Egypt, says Braum, who adds that these are "huge markets". He says the company will be building a roadmap over the next 36 months, and a roll-out strategy for Middle East and Africa will be developed once it has detailed a product strategy.
Braum notes Lenovo's strategy is to "defend and attack", and it is now focusing beyond traditional PC markets to look at servers and devices. He notes there is much space to grow locally as device penetration is at around 20%. "Mobility is key."
According to World Wide Worx MD, Arthur Goldstuck, there were 16.3 million smartphones in use in SA at the end of 2013. While this was originally forecast to grow to about 18.1 million by the end of 2014, he has said, the acceleration of growth this year suggests it could beat the 20 million mark - a penetration increase from 30% to 40% in just one year.
Real competitor
Yet, Lenovo is already taking on established brands, such as Samsung and Apple.
ICT veteran Adrian Schofield says the company has to be in the mobile space, and points out that it only took the company nine years - since buying out IBM's PC business in 2005 - to become the top PC player.
Schofield adds the company has the skills and capacity to take on other manufacturers, and is "not just another player", as it has the critical mass to elbow its way into another segment of the growing market. "A simple law of being in business is if you are enjoying a fat lunch at customers' expense, a competitor will arise from nowhere and try and steal your lunch."
However, Schofield notes, the question will be whether Lenovo's brand will be well-received as a nimble, innovative one, and be seen to be as competitive as Samsung and Apple, currently in global number one and two spots respectively. "The market will tell."