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Lenovo: Disruption Of The Pc Industry

2027 words - 9 pages

Executive Summary

Lenovo is currently the Top 1 market leader in PC industry globally. With the acquisition of IBM’s x86 server business and Motorola Mobility on 2014, and the changing landscape of tablets and smartphone market, we will look into Lenovo’s strategic position.

There are several issues facing by Lenovo now:

♣ Bad economic environment might post threat to Lenovo’s PC and enterprise business
♣ Declining growth in worldwide tablets market would hurdle the Lenovo’s growth of market share in tablets market
♣ Lack of Wearables and Internet of Things (IoT) Products would leads Lenovo missing out of future key driver in business
♣ Lenovo’s Smartphone market share is ...view middle of the document...

After the acquisition, Lenovo expand its global market share approximately 14% which rise its ranking to from number 6 to number 3 globally.2 The outlook of the server market is strong in contrast to the PC market. According to Gartner, worldwide server shipments grew 13% year over year in the first quarter of 2015.3
Apart from the acquisition of IBM’s server business, Lenovo purchased from Google on October 30, 2014. The company believes that the acquisition could enable Lenovo wider range of mobile devices with with compelling pricing and value. This is aligned with the company’s “protect-and-attack” strategy to attack the “Mobile Internet and Digital Home” (MIDH) area.4

Analysis of the issues

The Theory of Disruptive Innovation

Disruptive innovation, a term of art coined by Clayton Christensen, describes a process by which a product or service takes root initially in simple applications at the bottom of a market and then relentlessly moves up market, eventually displacing established competitors. 5
Gloomy economic outlook may slowdown the growth of Enterprise Business and Ecosystem and Cloud Service (ECS) Business
With the volatile global economy environment these day, it is expected that Lenovo’s corporate customers would put the purchase of new hardware (PC, Tablet and Server) and implementation of new systems / services on hold or would try to minimize the spend in these areas. Since the Enterprise Business is one of the key drivers of Lenovo’s business, its PC’s sales are very likely to decline and the growth of its server’s business might slowdown.

The global market demand of Tablet is declining
According to a new forecast from the International Data Corporation (IDC) Worldwide Quarterly Tablet Tracker, tablet shipments, inclusive of 2-in-1 devices, are expected to decline by 8.0% in 2015. Although there is an obvious downtrend in the tablet market, the 2-in-1 segment is gaining momentum this year, IDC expects the 2-in-1 segment to grow 86.5% year over year in 2015 with 14.7 million units shipped. The current leader in the 2-in-1 segment is Microsoft’s Surface product lineup and expected the soon to release iPad Pro will accelerate the adoption of the form factor. 6 Yoga is the current Lenovo’s product lineup in both ThinkPad and Lenovo product group which fallen into the 2-in-1 segment. Currently, Lenovo is ranked number 3 in the worldwide tablet market. It is hard to say if Lenovo can keep up its growth in market share in the world tablet market. 7

Lack of Wearables and Internet of Things (IoT) Products
Wearables and IoT are the hottest emerging products categories nowadays, and these two product categories are considering as disruptive technology. Take Wearables for example, once Apple released the Apple Watch on April 2015, Apple quickly take on the number 2 spot in the worldwide wearable market according to the IDC data.8 For Wearables, Moto 360 is the only product available which is passed on from the...

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