Lenovo can now see the light at the end of the tunnel as PCs continue to be a cash cow, data centers approach profitability, and mobile devices losses steadily shrink. TBR believes all three groups will be profitable within a year, but the smartphone business will be much smaller than Lenovo had hoped when it acquired Motorola Mobility from Google in 2014.
Going forward, Lenovo will fold the mobile devices group into PCSD in an effort to reduce supply chain costs and leverage synergies between PCs, smart devices and smartphones. Lenovo is the only vendor with all three types of devices, data center, PCs and smartphones, and the company is looking for ways to take advantage of this breadth.
At the same, the company plans a wave of growth based on technologies such as the Internet of Things, artificial intelligence and big data.
The company refers to a User-Device-Cloud platform as an important component of Lenovo’s future expansion, but the announced intentions are vague. Lenovo’s three main businesses are in mature market segments, so sustaining double-digit revenue growth will require entry into new markets.
The company has proven to be capable in delivering leading-edge hardware in established categories, and it will now have to develop new skills to address the opportunities of a connected multidevice world.
[Lenovo operates one of its two global headquarters in Morrisville, N.C. The other is in Beijing.]
(C) TBRI
