Lenovo on course to retain pole position in PC space

The Lenovo logo is seen in this illustration photo. Photo by REUTERS

Having made a solid start by cornering half of the market pie in the second quarter of 2019 and pushing the incumbent HP to the second slot, computing devices major Lenovo India has set its eyes firm on maintaining the lead for the full year and the next, eying more than 30 percent of the market.

According to IDC data, Lenovo led the domestic PC market, which includes desktops, notebooks and workstations, in the second quarter of 2019, cornering 49.2 percent of the 3.4 million units market, pushing HP to the second spot and Dell to the third. This has helped the Chinese company take a huge lead over HP, the market leader for long, with 37.2 percent of the total market.

Rahul Agarwal, the chief executive and managing director of Lenovo India has attributed the massive spike in market share to a large order from the Tamil Nadu government and admits that they will not be able to maintain this lead going forward and that the third-quarter numbers will be much lower.

"Of course, the overall market sentiment is not that great for any segment including ours and we did better than last year during the Diwali sales when our volume spiked over 15 percent. And the high Q2 numbers are not sustainable as this was on the back of a large order from Tamil Nadu.

"Therefore, my objective is to further build on this boost in Q2 and close the year with 30-31 percent of the volume market by March 2020. I hope to maintain the same lead in FY21 as well," Agarwal told PTI in an interview.

He said while globally the company nets USD38 billion of its USD50 billion revenue from computing business, back home, two-thirds of the volume come from laptops and the rest from desktops. Globally, one in four computers sold are made by Lenovo.

The company leads the domestic tablets market with a whopping 48 percent, in PCs 28.8 per cent in Q1, he said, adding the Tamil Nadu deal has increased it massively.

It can be noted that during the second quarter, Lenovo closed a deal with the Electronics Corporation of Tamil Nadu, under which the state will procure about 1.5 million laptops for the students from Lenovo. The deal boosted its commercial segment manifold helping it offset a sharp 14 percent fall in consumer segment during the quarter.

Lenovo was at a distant third position in Q1, with a market share of 25.2 percent of the PC space, which was a growth of 6.2 percent year-on-year and a high 29.2 percent sequentially. But the TN deal has given it as much as 37.2 percent of the market in the first half of 2019.

Earlier this month, the company rolled out a new laptop under the label of ThinkBook aimed at the new generation businessmen in the small and medium businesses segment priced at Rs 30,990 upwards.

And Agarwal said, going forward the company will increase its focus on the small and medium business (SMB) segment, which currently nets around 25 percent of its volume at 2.3 million units, while government and large corporate segment also net a similar volume, making the retail segment the largest with 4 million units.

In fact, he said the SMB segment is the fastest-growing vertical for the company.

Asked about investments towards capacity augmentation, Agarwal said, there is no plan as of now as its 1-million unit Pondicherry plant is running at one-third of its installed capacity now and it imports almost 80 percent of the volume. There is no price benefit or any incentives for local manufacturing nor are there any disincentives for imports, Agarwal explained the rationale.

On online sales, he said mobiles are sold more online sales through e-commerce platforms but when it comes to computers the same gets only around 30 percent.

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