Lenovo Step in Mobile Market

Buyback of handset arm suggests computer maker harbors global intentions for Lenovo-branded mobile phones, but analyst says this puts strain on core PC business.

The Chinese computer maker last week announced it bought back Lenovo Mobile Communication Technology in a deal worth US$200 million in cash and Lenovo shares. The company had sold the business unit to a group of investors in early 2008.

In a statement, Lenovo said it plans to capitalize on combined synergies from the two companies in product innovation, manufacturing, channels and retail “to lead the market for new mobile handheld devices in China”.

However, Shaun Rein, managing director of China Market Research (CMR), noted that Lenovo may be interested in more than just the local market, and its global ambitions could be driven by demands from its private investor shareholders.

According to news wire Reuters, private investment firm China Oceanwide Holdings Group purchased a 29 percent stake in Legend Holdings, Lenovo’s parent company, in early September.

The PC maker does not deny plans to expand its mobile business outside of its home market. In an e-mail response to queries from ZDNet Asia, a Lenovo spokesperson did not elaborate on global expansion, saying instead “our first focus will be on the fast growing China market”.

Chinese customers’ perception of the Lenovo brand had already changed following the company’s acquisition of IBM’s former PC division. Within China’s mobile phone market, “Lenovo just doesn’t count” among the top players, which include market leader Nokia, Korean players Samsung and LG, and Apple. Lenovo, though, said it is ranked No. 3 in the China mobile market with a share of 4.5 percent.

Related Products:
  • None
  • No responses yet

    Inquire Now