You might know Lenovo best for designing PCs, but the Chinese tech hardware icon has become increasingly prevalent in the smartphone market in recent years. This month the developer came out with three handsets in China, but Latin America is anchoring much of Lenovo’s handset business and bringing in profits, the company says on its website. Moto-model phone shipments to Western Europe went up toward the end of 2017, it adds. All in all, 5 million of its signature Moto Z handsets have shipped globally.
But if you know more about the PCs, that’s natural. Lenovo’s phone business is slipping overall as other brands do better marketing, analysts say. Lenovo’s acquisition of the Motorola smartphone business in 2014 has also complicated sales of phones rather than giving the developer a global lift, experts add.
Lenovo took less than a 1% share of the China market in 2017, and it has sunk from fifth to eighth place in the world for smartphones over the past few years, says Kiranjeet Kaur, research manager with market research firm IDC’s Asia-Pacific Client Devices Group. Lenovo’s global share reached 3.2% in 2017, according to the Taipei-based Market Intelligence & Consulting Institute.
Specs, marketing and competition
In China, fellow domestic brands Xiaomi, Oppo and Vivo have risen up smartphone market share charts as Lenovo has slipped. They all make affordable Android handsets, but Lenovo began losing ground in 2015, Kaur says.
“There lies the problem again that the phones do not show any differentiation, design or technology,” Kaur points out.
“Lenovo had relied a lot on telco channel sales to drive its smartphones, and Lenovo didn’t react quick enough to the decline in telco subsidies,” Kaur says. “These other players in the market, on the other hand, explored other channels, be it the online channels or going deeper into the smaller towns. And this was accompanied with a lot of marketing hype and activities highlighting trendy features by these players.”
Lenovo may have been busy marketing in Latin America. In Brazil, the most important market for Lenovo phones by volume, Motorola localized ad campaigns “to leave a deeper impression on consumers and target a wider group of people,” says Hattie He, research analyst with Canalys in Shanghai. “However, Lenovo has limited influence in the mainland China smartphone market.”
The Motorola factor
Lenovo acquired the Motorola Mobility smartphone business from Google in a $2.91 billion in a cash-and-stock deal in early 2014. The acquisition would strengthen its “position in the smartphone market” and grow its presence in the Americas, the Chinese firm said in a statement in 2014.
At the time, the company had cause to be optimistic. The acquired Motorola’s higher-end Moto Z smartphones generally last longer than other handsets in their class, Market Intelligence & Consulting Institute senior industry analyst Eddie Han says. Moto Mods, and accessories such as speakers and battery packs that attach to Moto Z phones offered Lenovo-Motorola phones a “unique selling point,” he says.
However, Lenovo never quite leveraged the Motorola name or technical know-how to get ahead globally, analysts say.
Lenovo-Motorola phones also lost some strength when the handset sub-brand ZUK Mobile closed, Han says. The brand died last year just 23 months after it was established. Last month, Lenovo said it would lay off staff people at Motorola group in Chicago where it designs Moto Z phones, news website Fast Company says.
“The positioning of Lenovo and Motorola remains unclear, and with layouts and management restructuring continuing, the company lacks concrete business strategies to help it gain share in the global smartphone market,” Han says.
Acquiring Motorola Mobility didn’t help in China “because there were many others who had captured Chinese consumer mind and wallet share by that time,” Kaur explains. The Motorola brand has gained little following outside its traditionally strong markets such as Brazil, India, Mexico and the United States, she says.
Other Lenovo units make more money
PR representatives for the $43 billion Fortune 500 company would not comment for this report, but public statements from the Hong Kong-listed firm indicate that other Lenovo business units are pulling in more revenue than smartphones provide.
In the third quarter of 2017, Lenovo’s mobile phone business “performed as expected,” the company’s investor relations website says. That unit saw revenue fall 5% from the same three months of 2016 to $2.1 billion, it says. Revenue from PCs and “smart devices” grew 7.6% in the quarter and rose 16.7% for the company’s Data Center Group, the company reports.
Lenovo indicated in a statement last month that it would move its “core strategy” to “augmented intelligence,” and at the Mobile World Congress industry event it talked up related devices such as its voice-enabled Yoga 2-in-1 laptops. Unsurprisingly, smartphones didn’t get a mention as part of that strategy.