The maker of the ThinkPad is seen as a shining example of the advance of China’s technology firms, or as a warning to Western companies about the perils of stuff-ups, depending on which analyst you talk to.
Lenovo certainly has big elbows. It has forced its way into the market with a combination of aggressive pricing, overseas acquisitions and building on the fast-growing home market.
True, analysts cough, Lenovo’s rapid gains in market share have come at the expense of profit margins and the company is expected to slow down a bit soon.
Frederick Wong, executive director at Avant Capital Management told Reuters that it was just a matter of time before Lenovo becomes Number 1 and it won’t be surprising if it happens later this year.
IDC said that it has been a busy year for Lenovo, which only became the world’s No. 2 PC vendor in the third quarter of 2011. But as the April-June quarter closed it was only a 0.6 percentage point away from HP’s 15.5 percent.
Gartner thinks that there is an even narrower gap, with Lenovo just 0.2 percentage point away from HP.
Lenovo’s rise was assisted by its purchase of Germany’s Medion and a joint venture with Japan’s NEC last year. It is also very pleased with its acquisition of IBM PC business in 2005 which started off its success story.
Some of its success has been because the big names like HP, Dell and Acer have decided to focus on margins rather than sales.
It might also suffer as the global economy, including Lenovo’s home turf and stronghold China gets worse. In other words its market share is getting better but its profits are sliding.