Beijing/Hong Kong: Lenovo Group, the world’s No.4 PC brand, said mobile Internet products will account for 10-20% of revenue in five years, as it embarks on a new drive into wireless computing.
The company hoped to sell millions of its new line of smartphones in one to five years, and tens of millions in the future, said president and chief operating officer Rory Read at a media briefing on Monday.
He added that mobile Internet devices, which include popular low-cost netbooks, currently accounted for only a low single-digit percentage among of Lenovo’s annual sales.
“The market in the smartphone space is just emerging in China,” Read said. “It’s just the beginning.”
The mobile Internet devices market would overtake traditional PCs in the next five years, chief executive Yang Yuanqing, said as the company launched new mobile Internet products at an event in Beijing.
After selling off its cell phone unit to focus on its core PC business, Lenovo bought back the unit last year as part of its aim to become the Chinese market leader in mobile communications, as the sector starts to converge with PCs.
However, the company does not expect mobile communications to make a meaningful contribution to its bottom line for the next two years at least, as it competes with more established players.
Lenovo, like rivals Acer and Dell, joined a growing list of traditional handset makers when it introduced a thin, touchscreen smartphone in January that runs on Google’s Android operating system.
Most market research firms such as IDC and Gartner expect growth in smartphones to outpace PCs in 2010, leading to a flurry of new entrants into the sector once dominated by cellphone makers such as Nokia and Blackberry maker Research in Motion.
The smartphone sector also offers fatter profit margins than the PC sector, with net margins often in the low single digits for the heavily commoditised laptop and in the teens for smartphones.
Corporate refresh this year
Lenovo, heavily reliant on corporate demand as a result of its purchase of IBM’s laptop PC arm, expects a corporate refresh cycle this year as companies that put off buying new PCs during the financial crisis consider doing so now.
“I’m optimistic that the economic environment will continue to improve,” said Read. “I also see that the key business accounts - corporate and large enterprise, which are an important part of our business, are also improving and their activities are getting better.”
Lenovo and Dell were both hard hit during the global financial crisis compared with rivals such as Acer, which offers more consumer products, and HP, which has a more diversified product offering.
Global personal computer shipments rose sharply in the first quarter, research firms IDC and Gartner said on 14 April, helped by business spending on technology equipment.
The global PC market is expected to grow by more than 9% to about 310 million units in 2010, IDC said, partially due to a corporate refresh cycle brought about by Microsoft’s launch of its Windows 7 software in 2009.