Lenovo has its best quarter ever

January 30 was a big day for Lenovo India's management team, as it hosted the company's global earnings conference as well as the board meeting of the Lenovo Executive Committee.

The October-December quarter turned out to be the Chinese company's best ever, with sales growing 12 per cent to $9.4 billion. Earnings grew a whopping 34 per cent to $205 million in a slow personal computer market.

Lenovo sold 13.8 million PCs in the third quarter of calendar year 2012, according to research firm IDC. This was marginally behind market leader HP's sales of 13.9 million units. "Its persistence as well as missteps of its rivals helped Lenovo to maintain a top 5 position in the U.S., and gain a couple points of share to nearly tie HP for the lead in global shipments," said the IDC report authored by David Daoud and Jay Chou.

The company is gaining fast outside its home turf, China. And Lenovo has renewed its focus on what it calls the PC Plus business, which also includes smartphones and tablets. Eighteen months ago, when it launched smartphones in China, nobody expected that within no time it would have a 15 per cent market share, just behind Samsung. In India, Lenovo has launched its smartphones in South India and Gujarat and sells them through a network of 1,200 retailers. They will be launched in the rest of the country by the end of June. "To be a market leader in the devices space it is important to be a leader in smartphones and tablets," says Milko Van Duijl, President of Lenovo in the Asia Pacific and Latin America.

In a Reuters news report, Eve Jung, an analyst at Nomura Equity Research said: "In my opinion, Lenovo's strategy in mobile devices is that it will focus initially on the overseas markets that it's most familiar with and this includes emerging markets."

Lenovo is already the number one PC maker in India, with 16.9 per cent market share. Now, it is looking at tapping the smartphone and tablet market, which is dominated by Samsung and Apple. "There is demand for multiple products at multiple price points, and there is a big opportunity," says Duijl. In the beginning, Lenovo plans to enter the customer's pocket with smartphones at a lower price point, and trade up gradually.

For the past few years, the company has been called a price warrior by its peers. But that is changing. "We will grow our net profits at 20 to 30 per cent CAGR," says Wong Wai Ming, Chief Financial Office of Lenovo. "We will balance the growth in the topline with growth in bottomline," says Duijl.

The ThinkPad maker has won the market share battle for now, but as consumers's affinity for mobile devices grow, Lenovo's next phase of growth will depend on its success in smartphones and tablets.