Lenovo earnings highlight shake-ups in the tech world


People walk past a Lenovo flagship experience store in Beijing, China Thursday, Aug. 15, 2013. (Andy Wong/AP)
August 15, 2013

Lenovo may be the largest PC maker in the world, but that might not be the most important part of its business. The company reported late Wednesday that while it’s officially taken the first-place crown in the PC world, its strongest growth is actually coming from its smartphone and laptop businesses.

The company reported that, for the quarter ending June 30, it saw its mobile products grow 105 percent over the same period last year. PC sales grew just 4.7 percent in the same period, though that’s much better than the 10.9 percent decline that analysts say hit the overall PC industry in the second quarter of 2013. Overall, Lenovo reported a strong quarter, with earnings of $174 million — an increase of a 23 percent year-over-year — on $8.8 billion in revenue.

Apart from the reflecting a shift in the PC industry, the Lenovo numbers also fit well with some interesting data the research firm Gartner released Wednesday: the majority of the world is smart, at least, when it comes to their phones. The firm reported that global shipments of smartphones have outstripped feature phones for the first time ever.

It’s not a shocking figure; smartphone growth has been steady and was widely expected to reach the tipping point in 2013. In fact, that news is old hat in the U.S., where — according to a June report from the Pew Center for Internet and American Life — smartphones are already the choice of the majority.

Even though it’s no surprise, the fact that over 50 percent of the market — 51.8 percent, to be precise — has now jumped on the smartphone wagon still carries significance for the technology industry, and possibly for the average consumer.

For one, it means that the world’s most promising smartphone consumers are probably no longer in the U.S., where users are more likely to be looking for an upgrade may be a little more hesitant about jumping on the newest phone. But first-time buyers are a great source of growth.

Gartner’s report showed that smartphone adoption growth was highest in the Asia/Pacific region at 74.1 percent in past year. Growth in China was certainly key for Lenovo, which saw its smartphone and tablet business grow 76 percent in its home country. Despite the fact that the company doesn’t even offer phones in the U.S. — though the company has said it plans to soon — Gartner reported that it is now the fourth-largest smartphone maker in the world.

Smartphone sales growth, according to Gartner, also grew 55.7 percent growth in Latin America and 31.6 percent in Eastern Europe.

The smartphone market overseas tends to look very different from the one in the U.S., in part because carriers subsidize phones differently around the world — meaning that the true cost of a smartphone is a more important factor in places such as China.

Plenty of smartphone makers angling to get in on the boom in Asia, which means that they’re also looking for ways to cut some of the costs from their phones to pass lower prices onto their consumers. That’s certainly the driving thought behind chatter that Apple will release a new, cheaper, version of its iPhone — one example of the that the shifts in the industry could end up as a boon to consumers everywhere.

Hayley Tsukayama covers consumer technology for The Washington Post.
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