Interpretation of Lenovo's 2014 fiscal year strategy update

On April 22, 2014, Lenovo convened the 2014 fiscal year swearing convention in Beijing. Yang Yuanqing and Lenovo’s new leader in the four major business groups all attended the event, reviewing the achievements in 2013 and formulating a new strategy for each business segment in 2014. aims.

Lenovo’s family, Yang Yuanqing, said that in the past 2013, since the acquisition of IBM’s personal computer business, Lenovo’s history has been the most influential year, and it is also a key year for Lenovo to “reverse growth”.

In 2013, Lenovo's major businesses have blossomed everywhere.

According to IDC's forecast, the personal computer industry will continue to shrink, but the trend of polymerization in the industry will become more obvious. Sony and Samsung are gradually withdrawing from the market; Dell and Hewlett-Packard have been indecisive, swinging around. For Lenovo, there is room for further growth, profitability and innovation.

In the global downturn of the PC market, Lenovo's traditional personal computer business maintained growth and further increased its market share. Finally, in the second quarter of 2013, it won the championship of the global personal computer market and realized Lenovo's dream for many years!

In the area of ​​tablet computers, Lenovo has basically completed the sales target of 10 million units with the YOGA tablet. If the PC and the tablet are combined, they have become the second largest in the world!

In the field of smartphones, Lenovo ranks second in the Chinese market and expands its business to 26 countries and regions. Many of these countries have achieved double-digit market share. With the rapid growth of emerging markets, Lenovo has demonstrated a strong growth momentum on a global scale. Its sales volume has increased by 60% year-on-year, reaching the goal of 50 million units, and it has reached the top four in the world!

In the server area, Lenovo’s sales increased 33% year-on-year. By investing heavily in platform construction, talent, and product portfolios, it has laid a solid foundation for rapid growth in the future.

In terms of ecosystems, the total download volume of Lenovo Music Store has exceeded 5 billion, and the daily average download volume has exceeded 24 million times! At the Global Telecom Exhibition in February 2014, Lenovo’s self-developed application “Eggplant Express” won the title of “MWC Best Product of the Year”. Until last month, the number of fast-transmitted eggplant users has exceeded one billion.

The most prominent contribution in China

Yang Yuanqing said that in achieving these goals, Lenovo will further increase its profitability and achieve more than 20% profit growth.

Yang Yuanqing also highlighted the significant contribution of Lenovo's China team: not only increased its market share to 35.1%, but also further increased its profitability by 1.4%. In the area of ​​PC+, which is the focus of offensives, China’s smartphone business has been operating for 4 years and has occupied the second place in the market for 18 consecutive months. Last year, with the VIBE product and the Yoga tablet, smartphones and tablets both blew the horn into the mid- to high-end market.

At the same time, the enterprise-class business is not to be outdone. The market share of the server has reached 12.4%, and the storage business has experienced the fastest growth in 7 quarters in a row. The gross profit rate has increased by 3.6%, which has set a new historical high.

In 2014, Lenovo's PC+ strategic update advantage superimposed into the main line

It cannot be denied that Lenovo has achieved success in implementing the PC+ strategy and is one of the few cases in which the traditional PC makers have made a successful transition to the mobile Internet. So what did Lenovo intend to do in 2014? Or what are they doing?

In the update of PC+ strategy, Lenovo has a new concept of superposition of advantages, which means personal computer + mobile device, intelligent terminal device + back-end infrastructure device, full device combination + cloud service.

Yang Yuanqing believes that in order to adapt to market changes, Lenovo must build new growth engines and profit pillars beyond the PC business. In the coming years, the business of smart phones, tablets, servers, and storage devices will continue to grow at speeds far beyond personal computers. According to IDC's forecast, by 2017, the global tablet PC market will maintain double-digit growth. The growth rate of smartphones will be slightly lower, but sales will reach 2 billion by 2015. The server market will also maintain its growth rate of nearly 10% at least until 2017.

Lenovo must also clearly understand the great challenges brought by the new environment. In order to meet the challenge, Lenovo announced two major mergers and acquisitions in order to acquire the IBM X86 server business in January 2014, and acquired Motorola's mobile business from the valley singer. At the same time, the organizational structure was adjusted and announced that since April 1, 2014, Lenovo Group has established four new and relatively independent business groups: PC Business Group (including Lenovo brand and Think brand) and Mobile Business Group (Smart Mobile phones, tablets, smart TVs), enterprise-level business groups (including servers and storage), cloud service business groups (including Android and Windows software opportunities). The above organizational structure will replace the existing two business groups (Lenovo Business Group including consumer computers and mobile products and Think Business Group consisting of business computers and enterprise products).

Lenovo must also clearly understand the great challenges brought by the new environment. In order to meet the challenge, Lenovo announced two major mergers and acquisitions in order to acquire the IBM X86 server business in January 2014, and acquired Motorola's mobile business from the valley singer. At the same time, the organizational structure was adjusted and announced that since April 1, 2014, Lenovo Group has established four new and relatively independent business groups: PC Business Group (including Lenovo brand and Think brand) and Mobile Business Group (Smart Mobile phones, tablets, smart TVs), enterprise-level business groups (including servers and storage), cloud service business groups (including Android and Windows software opportunities). The above organizational structure will replace the existing two business groups (Lenovo Business Group including consumer computers and mobile products and Think Business Group consisting of business computers and enterprise products).

In the early years, Lenovo formulated a strategy to attack the enterprise-class market. However, because it only operates in a few countries such as China, it cannot compete with others in terms of scale, and therefore it cannot develop a full range of products. Without a complete product portfolio, it is even harder to win competition. Enterprise customers and channel partners all hope that Lenovo can provide more rich enterprise-class products, the product is not HP, or Dell, and for the channel, basically only HP is optional, they are eager for more choices.

Through the acquisition of IBM's X86 server business, Lenovo's product line can cover the tower, all the way, two-way, four-way, until the X86 line of high-density and blade servers. With the original Lenovo entry-level products, coupled with IBM's high-end products, you can form a very complete product portfolio. At the same time, IBM's technological advantage, combined with Lenovo's operational capabilities, will achieve 1+1>2 results. In the future, Lenovo hopes to surpass its traditional competitors, HP and Dell, in a promising IPDC market with more advantageous costs. It will also make full use of the advantages of its brands and technologies to leave behind OEMs and ODMs.

So far, most of Lenovo's smartphone sales come from the Chinese market, but can the Chinese market support Lenovo for a lifetime? Obviously not. With the rapid growth of other emerging markets, China’s large-scale share of the global market cannot last long. And as competition intensifies, it's hard to really make money just by doing Chinese local brands. Therefore, Lenovo chose to tap into more emerging markets and mature markets.

Yang Yuanqing said that Lenovo also wants to break through from the second camp. Currently, in the global smart phone market, only two manufacturers have a dominant position and constitute the first camp. The second camp can be said to be a deer and long-term melee. In addition to the local brands in mainland China, there are Sony, Nokia, LG, and HTC, and so on. Everyone is eager to stand out and become the third force that can challenge the first camp. The vast number of mobile operators and channels are also happy to see the emergence of "third forces."

Lenovo is trying to be the "third force" they are looking for. However, to achieve this goal, we still face enormous challenges: the challenges of the brand, the challenges of the operator relationship, the challenges of the channel, the challenges of global engineering capabilities, and more importantly, the challenges of patents. Motorola has precisely these capabilities that Lenovo needs: it has a world-renowned brand, maintains good relationships with operators around the world and is also very popular among channel partners. It also has an outstanding team of engineers. Even more attractive is that Motorola has a rich patent portfolio. Once these advantages are achieved, Lenovo will be able to steadily reach the third position in the global smartphone market. Of course, the third is by no means the ultimate goal of Lenovo.

Lenovo's four business groups in fiscal year 2014 have their own goals

Lenovo announced that it will focus on defending the personal computer business because personal computers are the foundation for Lenovo's survival; at the same time, it aggressively attacks mobile services, enterprise-class services, and cloud service businesses.

Under the leadership of Lanchi, the personal computer business group’s primary task is to further enhance profitability. It will make full use of its market leadership and its advantages in the commercial field. While continuing to maintain profitability of its Chinese business and corporate customer businesses, it will strive to achieve healthy profitability of consumer businesses outside China, and will strive to improve the profitability of SMB business while paying attention to the expansion. The rate of placing services and options is directly related to profitability.

In addition, the industry's convergence trend is a great opportunity for Lenovo's expansion. In the SME market, consumer market and education, Lenovo believes that they have considerable room for development. Such as innovative desktop, tablet notebook and smart desktop products, in the future, will also create new types of ideas for the personal computer business to open up a new market space.

Under the leadership of Liu Jun, the mobile business group will use its innovation to promote the development of tablet PCs and smart phone business. In the field of smart phones in China, it will break through the high end, break through the open market, and break through the Internet channels to maintain strong growth and gradually improve profitability. At the same time, Lenovo will actively expand in emerging markets. After the transaction is completed, it will also fully integrate Motorola’s mobile business.

Under the leadership of Gerry, the enterprise-level business group will continue to build a product portfolio and firmly implement its own business growth strategy. After the transaction is completed, Lian wants to perform a comprehensive end-to-end integration of the IBM X86 server business. It will also give full play to strong channel relationships and promote the overall growth of the server business.

The cloud service business group will be responsible for He Zhiqiang. The business focus is to expand the number of users, enhance user experience, and bring more added value to hardware products. Finally, it will gradually promote the commercialization of cloud service business.

The cloud service business group will be responsible for He Zhiqiang. The business focus is to expand the number of users, enhance user experience, and bring more added value to hardware products. Finally, it will gradually promote the commercialization of cloud service business.

He Zhiqiang said in an exclusive interview with Saidi.com that the current cloud service business is still very small and the focus is on doing what is right now, mainly the personal cloud system security and optimization, collaboration and data management; enterprise cloud storage and platform-level services, such as Virtual operators and video sharing. Among them, the personal application representative "Eggplant Express" already has 100 million users, this year's target is 300 million; at the same time, the Internet service turnover should achieve 100% growth.

When asked about new product development and specific figures, He Zhiqiang said that it was inconvenient to disclose, everything was still in progress, and it might be possible to share new results with everyone after six months. Among them, "Eggplant Express" is now a mobile phone to a mobile phone, and also a mobile phone to a PC.

If we say that the number of users in the personal cloud business is not to make money, then the enterprise cloud will have to look at the turnover. He Zhiqiang said that enterprise cloud service associations have always been making money through charges, not free. He spoke two figures. First, the retention rate of all Lenovo's cloud storage service customers in the past three years exceeded 70%. Each enterprise user has an average AOI selling price, one service per year, and an annual increase of 100%. It proves that Lenovo's enterprise cloud services have a customer base and can sustainably grow.