Lenovo reinvents the PC

AMID the declining fortunes of the personal computer market, giant Lenovo remains focused on gaining momentum as market leader in the Asia Pacific region. The company has set new new initiatives and strategies targeting the central Asia Pacific region. 
The key strategies for 2017 are to move Lenovo from a product-centric to a customer-centric company and to focus more on revenue growth, said Ivan Cheung, executive director and regional general manager, Central Asia Pacific, Lenovo.
The overall market landscape has charged, with PC shipments contracting 3 per cent in the previous quarter across the Central Asia Pacific market , but the average unit-price rose. So, even though unit-shipments dropped, revenue still increased by almost 10 per cent. Two factors behind growth were consumers moving to high-performing products, and growing commercial use. 
"This is a big change compared to the last five years, when the market was growing but prices were dropping. And consumer segment growth was faster than commercial use. The situation changed in 2016, so we had to change our strategy as well," Cheung said.
"Our new fiscal year started in April. Our global team and Asia Pacific headquarter have come up with many new strategies and initiatives. One of the strategies is to move Lenovo from a product-centric company to a customer-centric company. In the past it focused on developing products and selling hardware," said Cheung.
In terms of revenue growth, the focus in the past was more on boosting unit shipments and market share. But the market has been changing very fast in the consumer segment: there are now two computer categories - gaming and convertible computers. In the past, people bought a PC as the first computer at home, but now with other alternatives like tablet and smartphone, the replacement cycle of the PC is longer. And people desire higher performance from their computers and are excited about form-factor device when they want to change or buy a new computer. That is why in the consumer PC market, the growth is not in unit shipments, but in revenue growth because of higher per-unit price, he explained. 
In the consumer sector, Lenovo will enhance all its three key touchpoints - website, social media, traditional media; store front; and after-sales service - to increase customer satisfaction and meet customers' needs as much as possible. Meanwhile, in the commercial segment, it will invest to enhance service capability. Lenovo wants to sell not only personal computers, but also personal computing, not the hardware but a lot of services customers will need, managed services like help desk, Cheung said.
Since 2016, the commercial PC market is growing faster than the consumer segment, because of its higher price. The PC market had started to decline since 2011 as commercial enterprises delayed their replacement cycle. However, because they delayed their replacement cycle for too long, a lot of companies have had to urgently replace their PCs.
Cheung said Lenovo continues to target the gaming PC market, which is growing very fast. Thailand is the biggest market, in terms of volume, for gaming PCs in Asia Pacific, bigger than Japan and Indonesia. Last year, Thailan's gaming PC market size was 60,000 units and it is still growing. Lenovo had a 20 per cent marketshare in this segment.
"We want to be the market leader. Thailand is the most important market for us because it's the biggest market in the region. Last year, we had one product line for the gaming market. After we launched Legion brand, we went from one notebook to wide gaming devices. Also, we build gaming Legion storefront and arrange the gaming competition. We will continue to do so in this region, as we want to do better than in the past in terms of both marketshare and revenue," said Cheung. The average unit price of gaming PCs are higher at US$1,000 excluding accessories. This market will continue to grow fast in the next few years. In 2016, the global gaming PC market was worth around US$36 billion, it was very huge. The Asia Pacific market saw a 20-per-cent growth.
In the Central Asia Pacific region, in terms of unit-shipment, about 55 per cent of revenue is from the consumer market, 45 per cent from commercial, while in mature markets like Hong Kong, South Korea, Taiwan, and Singapore, the revenue from the commercial market is higher than from the consumer market. In emerging markets like Indonesia, revenue from the consumer market is bigger. In Thailand, revenue ratio between consumer and commercial market is 65:35. Thailand is in the middle, transforming from an emerging market to a mature market. 
"When we formed the Central Asia Pacific region last year, comprising 13 countries, we wanted to make sure that all countries get proper focus. We want to be a customer-centric company, we want to understand customers, we want to talk to customers and get their feedback faster. So, if we do not have local people in each of these countries, who talk in the local language and understand the norms, it is not possible. Thus, our centralised team will not be only in Singapore or in Hong Kong; we will have more teams in each of the developing countries like Thailand, Vietnam, and Cambodia in the Indo-China region led by Lenovo Thailand," said Cheung.
In Thailand, the company will invest in 400 personnel, including 100 staff, 150 promoters, and 150 people in service centres. Instead of having more service centres, it plans to make the existing service centre more comfortable and advanced, and to invest in enhancing and upgrading the physical service centres. It invests US$ 5 million per year, in terms of marketing investment and aims for revenue growth of at least 10 per cent in 2017 in Thailand. 
The commercial market will get an enhanced product line and will have a dedicated team to take care of this market. 
According to International Data Corporation (IDC), the Asia Pacific - excluding Japan - (ApeJ) traditional PC market continued to stabilise with only a slight year-on-year contraction. The demonetisation crisis in India had a significant impact on the market, stifling demand and inhibiting shipments in the consumer and small and medium-sized business segments, but recovery towards the end of the quarter allowed for more sell-in. In China, robust demand for consumer notebooks supported by a shift to thin and light devices continued. The commercial market in most APeJ countries remained soft. Projects in India have been delayed, while China saw weaker-than-expected commercial demand. A negative macroeconomic environment also inhibited shipments, particularly in Malaysia, Indonesia, Singapore and the Philippines. On the other hand, larger orders from the public sector pushed the commercial market above expectations in South Korea.
Lenovo continued to hold the top spot, though the competition with HP remains fierce. The top vendor still faced a tough climate in APeJ but made significant strides in the holiday quarter in Europe and the Americas with a stronger performance in notebooks and capped the quarter growing globally at 1.7 per cent, ending six consecutive quarters of year-on-year declines.