Lenovo goes shopping in Brazil

By David Binning on Sep 6, 2012 7:48 PM
Filed under Hardware

Unveils key piece of global expansion plan.

Chinese tech giant Lenovo announced overnight it has bought Brazilian PC and consumer electronics company CCE in a cash and stock deal worth 300 million Brazilian Reais ($A144 million).

The deal is expected to greatly expand Lenovo’s market share in a region which has recently become the world’s 3rd largest PC market, bumping Japan to number four.

CCE boasts a strong customer base in Brazil in addition to an extensive portfolio of products spanning PCs, tablets, smartphones and TVs, categories which the Chinese company sees as defining the so-called post-PC era.

“This move more than doubles our PC market share in Brazil, one of the world’s fastest-growing and most important technology markets,” Yuanqing Yang, chairman and CEO, Lenovo said in a statement.

“CCE is an excellent fit with its four screen product portfolio and a valuable manufacturing base in Brazil.”

The deal is expected to be closed in the first quarter of 2013.

It is the latest in a series of strategic acquisitions made by Lenovo since it bought IBM’s PC business in 2005.

In January last year Lenovo bought NEC’s Japanese PC business to create a 51:49 joint venture. Five months later Lenovo bought Germany’s Medion for close to $1 billion, acquiring in the process one of Europe’s most recognised PC brands as well as an established distribution network.

The news of the latest acquisition comes as Lenovo celebrates the 20th anniversary of the iconic ThinkPad brand, which has generated more than 60 million sales since 1992.

Lenovo used the milestone to reiterate its track record as the fastest-growing tier-1 PC maker in the world, a feat it recently reported having achieved for 11 quarters in a row. It is currently number one in three of the six biggest PC markets; China (35.2 percent), Japan (25.4 percent) and India (17.1 percent) and now has 10 percent or greater market share in a total of 35 markets.

The Asia Pacific / Latin America (APLA) market is a key focus for Lenovo, with the company citing a relatively low PC penetration rate of under 17 percent. An important new weapon of Lenovo’s is its 4-year old Idea consumer brand, which encompasses many of the company’s recently launched Android-based tablet products.  

Lenovo’s APLA head of marketing Howie Lau said the company’s heavy investments in brand building over the years have paid healthy dividends, most notably with the success of the “Those that do” advertising campaign launched in January this year.  

Lau said the resulting boost to brand recognition contributed to Lenovo reaching the top spot for global consumer PC shipments in the first quarter just passed.

Australian Idea

Despite the fast expansion of Lenovo’s Idea consumer range, none are currently available in Australia.

In Australia, where penetration rates are much higher, the company is taking a stealthier approach in reaching out to newer markets.

David Heyworth, Lenovo A/NZ’s director of product solutions and alliances told CRN it was a matter of “when, not if” the Idea range would be rolled out in Australia. He said the company was waiting to realise more growth in the SMB market to provide a stronger foundation for such a launch.

Heyworth declined to comment, however, on exactly what that watermark was in terms of SMB market share.

Another key market identified by Lenovo is smartphones. The company is now number two behind Apple in the Chinese smartphone market, with speculation buzzing as to when the company plans to launch a global assault on the dominance of Apple and Samsung. 

Keith Liu, Lenovo’s APAL business development manager for the company’s MIDH (mobile internet digital home) division confirmed to CRN it was in discussions with carriers in Europe and the Middle East to provide Lenovo-branded 3G services to be bundled with its own Lephone-branded handsets.

However, he would not be drawn on when the company planned to launch its smartphones outside of China and into developed markets such as Australia, except to say that doing so involved big risk and regulatory hurdles with little guarantee of success.

“Not everyone is a winner in the smartphone market,” Liu said.

Nevertheless, Lenovo appears determined to advance what it refers to as its four-screens, PC-plus strategy encompassing the development of laptops, tablets, smartphones and TVs.

Bolstering its existing development facilities in the US, China and Japan, Lenovo expects early next year to cut the ribbon on its new $US800 million development facility in the central China city of Wuhan.

David Binning travelled to Tokyo as a guest of Lenovo.

 
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