Can mobile phones replace computers?
This proposition has been debated for many years. Apple said in its new iPad Pro advertisement: “Your next computer, why is it a computer”, pointing out that computers can be replaced by tablets or even mobile phones.
But Yang Yuanqing, chairman and CEO of Lenovo Group, gave a negative answer: Not only can’t, “computers are becoming just like mobile phones, just like a mobile phone.”…
As we all know, the PC business is always the foundation of Lenovo, and its revenue from the three main businesses accounts for nearly 80%. In the just-released first quarter results of the 20/21 fiscal year, Lenovo Group’s turnover reached 94.6 billion yuan, a year-on-year increase of 6.7%. Pre-tax profit reached 2.35 billion yuan, a year-on-year increase of 38%.
Taken together, Lenovo’s earnings report is as polarized as ever:
The trend of the main business PC increased, the profit before tax increased by 28% year-on-year, and the profit margin reached a record high of 6.3% ;
The mobile business, which has been criticized for many years, remains “weak”, with quarterly revenue down 27% from the same period last year.
Yang Yuanqing said frankly that the decline was mainly affected by the epidemic. North America and Latin America, the main markets, were the hardest hit areas.
However, it is worth noting that Lenovo’s dominance in the PC market seems to be threatened. Three research institutions gave different answers to Q2 shipments: IDC said HP has surpassed Lenovo; Gartner said HP and Lenovo have been “a little bit different”; Canalys shows that Lenovo is still leading.
PC is like a mobile phone will be “one by one”?
Judging from the performance of recent quarterly earnings reports, this established company has passed the “turning point”, and its performance in each fiscal quarter is slowly rising.
However, the ever-changing hidden dangers from the outside have always haunted Lenovo: Intel was out of stock before the epidemic, and then the factory was shut down by the epidemic, and then there was a wave of replacement of Microsoft Windows… The PC environment kept “trembling” as each event changed.
Lenovo has been relatively stable in recent fluctuations. The financial report shows that despite the spread of the new crown epidemic and the uncertain environment, Lenovo Group’s turnover this quarter still reached 94.6 billion yuan, an increase of 6.7% year-on-year. Pre-tax profit reached 2.35 billion yuan, a year-on-year increase of 38%. Net profit reached RMB 1.5 billion, a year-on-year increase of 31%.
Specifically, the personal computer and smart device business revenue increased by 10.1% year-on-year, accounting for 80% of the group’s total revenue. Profit before tax increased by 27.9% year-on-year. At the same time, the pre-tax profit margin further increased to 6.3% year-on-year, a record high.
In an interview with Sina Technology, Yang Yuanqing said that the future growth of PC is sustainable. “Working at home and studying at home are a big trend in the future. PCs are becoming a tool like a mobile phone. At the same time, PCs are in addition to information In addition to consumption, it is also a productivity tool, and it still has considerable room for growth.”
He also pointed out that the rapid growth of this round of PC business is the mature market. “We see that the growth of PCs in Japan, the United States, and China is gratifying. The penetration rate of PCs in these regions is already extremely high. However, due to the demand for home study and office, PCs are still showing a growth trend.”
Competition is still fierce, “threated” by HP?
It is worth noting that although Lenovo PC is strong, it has not yet widened the gap with competitors, and international competition is still in a fierce stage.
According to the latest data from Gartner, a foreign research organization, Lenovo still tops the list in terms of PC shipment statistics in the Q2 quarter of 2020, but the “runner” HP has grown strongly, and the gap between the two parties has been “a few percent”.
The data shows that Lenovo’s Q2 shipments reached 16.197 million units, while HP’s shipments were 16.165 million units. In terms of market share, the difference between the two parties is only 0.1%. However, Lenovo still has the upper hand in terms of shipment rate and market share. The two currently account for almost half of global PC shipments, reaching 49.9%, which is higher than 46.6% in the same period last year.
The data of IDC, another international research organization, slightly deviates from Gartner. According to IDC, among the world’s major PC manufacturers, HP has surpassed Lenovo, ranking first with a 25% market share, with shipments of 18.082 million units, and Lenovo ranked second, with shipments of 17.411 million units and a market share of 24.1. %.
However, data from Canalys, a data research organization, said that Lenovo shipped more than 20.2 million devices in Q2, a year-on-year increase of 12%, and still ranked first in the world for personal computer share.
The different statistical dimensions have caused significant differences in the data of the three research institutions. However, Gartner and IDC both expressed concern about future PC demand, believing that at the moment of the epidemic, PC shipments are mainly driven by short-term business needs. With the reopening of schools and workplaces, this growth is amid the global economic recession. It will not last until after 2020.
Epidemic caused a decline in mobile phone business in China
Lenovo’s mobile business has been criticized for a long time. Although Lenovo has successively launched folding screen mobile phones and 5G mobile phones in the past year, it still seems to have not found a significant profit point.
The financial report shows that the quarterly revenue of the mobile business dropped by 27% compared with the same period last year. Yang Yuanqing explained, “There is only one reason for the decline in the mobile business year-on-year in the last quarter, which is due to the impact of the epidemic. Our main markets are North America and Latin America, but both are the most severely affected areas. There are two markets throughout the quarter. The decline is great”.
However, he is not worried, “The main influencing factor in the last quarter was the epidemic. This quarter will be better than the previous quarter. In addition, the leading indicators of mobile phone activation rate in the mobile business are relatively clear, and the activation rate has dropped significantly in the previous quarters. , But now it has basically returned to the level of the same period last year. This quarter is also limited by supply. If it were not for supply problems, we would have pretty good growth.”
In fact, Lenovo had previously adopted a focus and concentration strategy for its mobile business. In short, it was to avoid fiercely competitive markets and invest in countries with potential for profitable growth. This has led to a reduction in business scale and reduced losses.
In contrast to the Chinese market, Lenovo has not absolutely given up.
Not long ago, Lenovo released the rescuer gaming mobile phone Pro. Due to the short release date, no authoritative statistics are available yet.
However, some people pointed out that although Lenovo’s mobile business has switched to subdivided areas in China, this field is not blank. Black Shark, Razer, Asus, etc. have already entered the game. This is more like a hardware stacking competition, and there is no demand for it. Obviously conclusive.
If you want to overtake a corner in the market segment, Lenovo’s mobile phone may have a long way to go.
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