Lenovo execs: Pandemic driving growing demand for work-at-home PCs

“The clear trend we see in that- usually at home, you have a one or two PC, so it’s one to two PC per family at least in mature market. It’s really becoming one PC per person.” – Lenovo President Gianfranco Lanci

MORRISVILLE – If there is a bright side to the global COVID-19 pandemic for tech giant Lenovo it’s growth in demand for gear enabling people to work from home.

So said the conglomerate’s top two executives in a conference call with financial analysts early Thursday from Hong Kong to discuss its latest financial results.

“[W]hat we see from working from home, learning from them, it’s really a pick up of demand,” explained Gianfranco Lanci, Lenovo’s Corporate President and Chief Operating Officer.

“We continue to see strong demand that this quarter on notebook, both traditional notebook and Chromebook, Winbook. Chromebook Winbook for learning from home, but traditional notebook for working from home.”

And the U.S. was a big growth factor for the company with sales in the Americas up nearly 10 percent year-over-year.

Lenovo, which operates dual headquarters in Morrisville and Beijing, already the world’s top PC seller ahead of HP and Dell. It managed to improve marketshare despite a shutdown of numerous production facilities in its homeland of China due to the pandemic. Factories are back online now, but Gianfranco noted that the forced idling of production meant a missed opportunity.

Tracking Lenovo PC sales performance. Lenovo graphic)

“[D]ue to the factory and due to production in China, we couldn’t leverage Q4 demand too much,” he said.

Looking ahead, however, Gianfranco said telework means more PCs in homes as companies require employees to work remotely due to social distancing and stay-at-home limitations.

“The clear trend we see in that- usually at home, you have a one or two PC, so it’s one to two PC per family at least in mature market. It’s really becoming one PC per person,” Gianfranco said.

“And I think is the usual – and this is going to last. This I don’t think it’s going to just to last for the coronavirus impact, but it’s going to last forever. And it’s going to last forever, but because clearly, at least the working from home is something that is going to last forever.

“People will continue to work from home even after the crisis, maybe not at the same level, not to 100%, but for sure a good percentage of people will continue to use at home, because it’s proven that it’s more efficient from a company point of view and it’s also better perceiver and from a employee point of view.”

Yang’s view

Chair and Chief Executive Officer Yang Yuanqing agreed and stressed what he sees as the company’s advantages in the market.

While he noted that Lenovo is putting its focus on what he called “premier products” (higher-priced gaming, workstations) the company is benefiting from a global manufacturing footprint so not all facilities were closed and that it has advantages over competitors through “component cost advantage.”

Plus, Yang added, Lenovo is selling gear through its ecommerce channels.

“[B]ecause of this coronavirus, actually, our e-commerce business is growing significantly. And the direct e-commerce also helped to improve our profitability. So – and also this trend will be – will continue,” Yang said.

“Regarding of the outlook of the PC, I completely agree with Gianfranco. So this PC demand booming, driven by work from home and the study at home is not just a short-term trend. It could be a long-term trend.”

Lenovo also is getting buys from compnaies who are providing machines for employees to work from home, Yang saud.

“Gianfranco just talk about the families will buy more PCs for their parents and their kids. But meanwhile, many commercial customers are buying laptop for their employees as well to prepare for their work from home,” Tang said.

“So we see this trend is not short-term. So it could be a long-term.”

One down note for Lenovo in the buying trend, however, is a drop in demand for desktop machines.

Referring to Yang by his nickname YY, Lanci told analysts: “[W]We see very strong demand on notebook. … We are experiencing some slowdown on desktop, but when we compare the increase on notebook and the slowdown on desktop relatively smaller.

“So, for sure, there is a slowdown on that because as we said, the people are buying notebook either as a personal device or companies are buying notebook to provide to the employees. And so there is some slowdown on the back of demand, no doubt.”

Lenovo topped $50 billion for its fiscal year but quartertly revenue of $10.58B was down year-over-year by nearly 10 percent and missed analysts’ estimates by $540 million, according to financial news site Seeking Alpha.

No mention was made in the call or in the earnings announcement about reports of any layoffs or other financial cutbacks made due to the virus.