Lenovo plans to revitalize Motorola's place in India's smartphone market
The company is focused on its gaming products under Legion brand.
It is also getting smart devices, as the opportunity becomes stronger.
With Samsung not launching its flagship Galaxy Note 9 and LG not unveiling new V-series flagship, IFA 2018 was an opportunity for another tech brand to turn Europe’s biggest tech event into its own big show. Lenovo was one such brand who made the most of that opportunity by launching five consumer laptops, three Chromebooks, two gaming laptops and four smart home devices. Lenovo, despite its Chinese origin, is widely seen as a global brand and since it bought IBM’s PC business in 2004, the company has turned itself into an innovator.
Lenovo came into IFA 2018 on the back of a strong quarter results where the company recorded double digit growth for the second straight quarter. While the global sentiment around PC business remains weak, Lenovo continues to thrive and has reported two strong quarters. The company remains number one vendor for PCs and tablet in Asia Pacific and according to Gartner, it was tied with HP as the largest PC brand globally. Lenovo has also completed acquisition of Fujitsu’s PC business, which has helped the company to increase revenue in the services business.
On the sidelines of IFA 2018 at Messe Berlin, BGR India got a chance to catch up with Ken Wong, President of Lenovo Asia Pacific, who spoke with us on number of topics, including growing momentum around PC business, plan to resurrect Motorola’s reputation in the smartphone segment, addition of Fujitsu to its enterprise portfolio and how it aims to break into smart home business. Below is a transcript of the interview, edited for clarity:
Q: How does Fujitsu fit into Lenovo’s brand strategy?
Ken Wong: In Asia Pacific, I think the addition of Fujitsu business has been encouraging and it is a very important strategy. For one, it helps to strengthen our leadership in markets like Japan, where we have close to 50 percent of the market share with three brands – Lenovo, NEC and Fujitsu. Locally, consumers think NEC and Fujitsu as a premium brand. Fujitsu as a brand is also a great fit for our business and they have a lot of great products, especially in markets, like Japan and Europe and with Lenovo, there is scale and technology. Getting together is actually a perfect fit.
As we announced when we acquired the business, we are going to have Fujitsu business run very independently. The idea is, if you are a Fujitsu customer or business partner or even an employee, the transition would be seamless. At the customer end, we want to ensure there is a choice, different proposition from our brands – Lenovo, NEC and Fujitsu.
“Maintaining customer choice, maintaining autonomy of Fujitsu business is our strategy. It has proven to be very successful so far.”
Q: Do you see an opportunity for Fujitsu in India, where enterprise customers are familiar with IBM and ThinkPad?
Ken Wong: I think Fujitsu team is not only looking at Japan business but all around the world, mainly looking at which other markets it can push further. It depends on what customers want. Right now, we are focused on Japan and Europe and in Asia Pacific, we are doing good business in Hong Kong and Taiwan.
— Ken Wong (@Ken_Wong) August 31, 2018
Q: How do you see India’s PC market and opportunity to grow here?
Ken Wong: I think the Indian market is having very good momentum, especially when compared to last year. A stable monetary policy, implementation and better understanding of GST allows for pent-up demand in business. Another driver for us is the Windows upgrade. I think a lot of customers are still running older version of Windows, which is reaching the end of life. There is a lot of concern about security and it is a requirement bigger than ever before. The third growth factor is demand coming from small and medium businesses and it is particularly driven by GST.
Going forward, I see SMB growing faster than our consumer business in India. The other growth segment is gaming. India is well-known to be a growth market but not as a gaming market. In the past 12 months, the gaming market in India is growing faster and we plan to put more resources and focus on how we can capture that market. At IFA, we are introducing a lot of gaming products that will cater to this segment.
In terms of market research, we have identified that there is one gaming segment which is under served by all brands in the market. This gaming segment is about 38 percent of the entire market. We call them avid gamers and characteristics of this gamer is that they play PUBG and all sorts of games on their PC but they also have other requirements from their gaming machine, like productivity and entertainment.
With our new Legion gaming machines, we are looking at how to serve the entertainment and productivity requirements of these “avid gamers” in a gaming package. We are doing a lot of things around gaming but serving this segment is our number one priority. These requirements are not just restricted to India but can be seen on a worldwide basis. We see this segment as a constant growth market.
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Q: Will Lenovo change its strategy around Legion for the Indian market?
Ken Wong: For Lenovo, it is given that we need to be able to provide latest hardware and technology, whatever gamers are looking for – be it the latest CPU or GPU capable of 4K gaming. By doing that, we are just catching up with all others gaming brands but I believe, Lenovo can win by catering to that 38 percent of the gaming market, which no other brand seems to be paying heed to right now.
Q: What is Lenovo’s strategy in the smart device segment and which markets do you aim to target first?
Ken Wong: I think every company is claiming to have smart devices but it is important to understand what customer wants. We have done tons of research and we have tried to summarize three key data points for any device to qualify as a smart device. These three things you will see across our notebook, desktop, smartphones, smart devices and smart home products.
- How you interact with the device – Natural Language Interface like Alexa, Cortana, Google Assistant
- Security – Be it corporate, SMB or consumer, the number one concern is about security. With 5G coming out next year and all devices essentially becoming connected devices, there is an enormous opportunity to secure not only devices but also user information.
- Entertainment – Millennials across all country want entertainment and smart devices is not just about productivity. For millennials, a smart device is one they use to play games, listen to music and watch videos on the go.
These are the three things that we see across our smart devices, regardless of what category they belong to. In terms of market availability, we are mainly looking at the feedback. In Asia Pacific, the smart display will be first launched in Australia and there is lot of demand in Japan. In India, we are looking at partners to see where the demand is and we will definitely launching it.
Q: Motorola is no longer in the top five in India’s smartphone market and how do you plan to win back consumers?
Ken Wong: Globally, we are going to be more focused on markets where we have strengths and India is one such market. In North America, we are seeing very good momentum and in Latin America, especially Brazil, Argentina and Mexico, we are number 1 or number 2 smartphone vendor. Our strategy in the smartphone business is to make sure we continue to excel in the country where we have good momentum.
We also plan to have much simpler product portfolio going forward but the focus will be on specific needs of consumers. Smartphone market around the world is very competitive and it is rather difficult to make money and with Motorola, we are looking at right cost structure to make sure that we stay competitive. Having market share is important but Lenovo is focused on building a sustainable and healthy business.