Lenovo Bets Big On India To Fix Dropping Smartphone Biz

After reporting its first loss in six years, Chinese technology major Lenovo is now betting big on the Indian market to fix the dropping smartphone business. Lenovo, which received about USD one billion in revenue from India last year, is also looking at bringing in more premium devices here, including new Moto Z smartphones that can be customized with ‘mods’.
“We will continue to invest in the market and grow our share here, there is a strong long term potential,” PTI report published in Economic Times quoted Lenovo Senior Vice President and Co-President Mobile Business Group (MBG) Aymar de Lencquesaing as saying.
He added the potential in the Indian market is huge as 4G networks are being rolled out by telecom operators and there is robust economic growth.
“We have a share of about nine per cent and we are focused on growing that. Getting to double digits should not be difficult,” he said.
Lenovo reported its first loss in six years, majorly hit by exceptional acquisition and restructuring costs as well as weak sales for its smartphones business. Lenovo booked a net loss of $128 million for the year ended March 31, which compared with a profit of $829 million the previous year and analysts’ expectations for a loss of $123.6 million, according to Thomson Reuters SmartEstimates.
Last year, Lenovo’s revenues from India grew about 90 per cent, even as that from China declined 26 per cent. Overall, revenues grew 68 per cent.
According to research firm Gartner, smartphone sales are expected to slow down in 2016 globally, rising only seven per cent compared to double digit growth seen in previous years.
This is on the back of slower sales growth in mature markets like Europe and Japan. Smartphone sales were flat in China in 2015 and little growth is expected in the next five years. India, on the other hand, remains an opportunity and presents the highest growth potential, Gartner said.
Asked about the investment plans, Lencquesaing said the company is studying ramping up the manufacturing capacity in India from the current 6 million units. The enhanced capacity will be for meeting requirements in India and there are no plans to export from here as of now.
In August last year, Lenovo had partnered contract manufacturer Flextronics to start making Motorola and Lenovo smartphones in India at the latter’s unit at Sriperumbudur near Chennai.
Lenovo is also bullish on the talent pool in India and said it works actively with developers here. It also has a R&D unit in Bengaluru. Lenovo’s MBG sales for the quarter ended March 2016 stood at USD 1.7 billion. It shipped 10.9 million smartphones in the fourth quarter and 66.1 million in the full year. Motorola contributed nearly 5 million units in the quarter to Lenovo’s total, while adding USD 1 billion to MBG revenues.