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Look out HP, Lenovo is close to grabbing your PC crown

Analysts expect Lenovo to become the top personal computer manufacturer by early 2013

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If Chinese-based computer manufacturer Lenovo keeps moving at its current pace, the company will surpass Hewlett-Packard as the world's largest PC maker by the beginning of 2013, industry analysts say.

That would represent a big shift for an industry that has long seen HP sit atop the PC business. Lenovo's challenge represents the closest any PC maker has come to taking the lead position from HP since the second quarter of 2008, when Dell came within 2.7 percentage points.

Lenovo's climb also puts a spotlight on how rocky things have become for the company that once had an unyielding grip on its lead spot in the industry.

"If the current trends for both companies continue, Lenovo should surpass HP in Q3 or Q4," said Charles King, an analyst with Pund-IT, Inc. "On its face, it might not mean much to the industry. But Lenovo taking the top spot would be a huge boost for China's IT industry as proof they can play and win in the global big leagues."

Lenovo has been steadily moving up the ranks of the world's top PC makers in the last several years.

In the third quarter of 2011, Lenovo passed Dell to take the industry's second-place spot. It was an impressive move for a company that was in fourth place as recently as the first quarter of 2011.

Gartner analysts at the time said increased competition in the enterprise PC market hurt Dell and boosted Lenovo, adding that Lenovo's "aggressive marketing" in both the enterprise and consumer markets aided the company.

Then, just this week, a Gartner report showed that Lenovo is within reach of HP, which is barely clinging to its top spot in the market.

HP, which suffered a global shipment decline of 12.1 percent in the second quarter of this year, holds 14.9 percent of the PC market. Lenovo now has 14.7 percent.

"Lenovo has more than a good shot to overtake HP in global PC sales," said Dan Olds, an analyst with The Gabriel Consulting Group. "They'll need a very solid third quarter, back-to-school selling season to do it this year, but I'd expect to see them sitting alone in the number one slot by the end of first quarter 2013."

Analysts agreed that HP has been causing many of its own problems

In August 2011, HP executives announced they were considering spinning off the company's PC manufacturing business. While HP later reconsidered and decided to keep the business, the possibility created a major stir in the industry.

Dell CEO Michael Dell later said the confusion that HP caused in the industry created an opportunity for other PC manufacturers as HP's customers had been left adrift.

"The PC division has to have been hurt by the turmoil [caused by] HP's executives, especially since much of the rancor was over the future of HP's PCs," said King. "I expect that uncertainty impacted the company's PC sales, though things should have calmed down by now."

To get out of its predicament, HP needs to first reassure customers that it is in the business for the long haul, King said. "Second, [they need to] do whatever's necessary to get the PC product development to create new, compelling products," he added. "Third, they need to hope, pray, even sacrifice the occasional virgin for the success of Windows 8."

The problem, though, is that while HP struggles to regain its footing and reputation, Lenovo is firing on all cylinders.

"While most of the other major vendors have increasingly outsourced manufacturing and even design of their PCs to reduce costs, Lenovo has gone the opposite way and brought more manufacturing and design back in house," said Olds. "This gives Lenovo the ability to innovate quicker and get a jump on competitors in bringing new features to market."

He also pointed out that Lenovo is the home team in the burgeoning Asian market and that gives the company a big advantage in global sales.

"And don't forget that Lenovo inherited a reputation for high-quality products that came with being the former IBM Thinkpad unit," Olds added. "They've managed to hold on to and even improve on quality, while innovating and revving products faster than IBM did. More importantly, they can do this while hitting the same price points as their biggest industry competitors - something that IBM was never able to do in PCs."

Patrick Moorhead, an analyst with Moor Insights & Strategy, agreed that Lenovo is on the right track with various aspects of its business. And that will make it difficult for HP to fend off this competitor.

"Lenovo is leveraging its low overhead with refreshed industrial design to attack the consumer market and [is] picking up significant traction in emerging regions," said Moorhead, adding that HP needs to move fast. "They need to reinvest in ground-breaking innovations they were recognized for a short five years ago to bolster their brand as a leading client PC brand."


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Lloyd Scott said: A cave is too good for a fool like that I think he lives in a gravehes brain dead

kirala said: Really Where do you live in A cave

Dsmond039 said: Its impossible for a Chinese Company to be no 1 in anything let alone in the high tech business where they are at least fifty years behind

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