Lenovo faces uphill climb to reach mobile phone summit

Lenovo, which saw its share price reach a 13-year high yesterday, is not expected to become one of the world's top-five mobile phone brands anytime soon, despite the company's aggressive expansion in its home market.

Market research firm Gartner had earlier forecast that Lenovo would unseat Samsung Electronics this year to become the mainland's No1 supplier of internet-ready smartphones.

Without elaborating, Gartner this week predicted that "three of the top-five mobile phone vendors will be headquartered in China" by the end of next year.

With mainland telecommunications equipment manufacturing giants Huawei Technologies and ZTE already among the leading suppliers of basic-feature mobile handsets and smartphones, Lenovo was tipped to be in a good position to join their ranks.

"That is unlikely," Alberto Moel, a senior analyst at Bernstein Research, said yesterday.

"We've estimated Lenovo's total mobile phone shipments in 2012, 2013 and 2014 to be at 29 million units, 40 million and 44 million, respectively.

"Those numbers would put Lenovo's ranking at either No6 or No7 worldwide."

Lenovo, the world's second-largest supplier of personal computers last quarter, has ramped up production and mainland sales of basic-feature mobile handsets and smartphones under its nascent Mobile Internet and Digital Home division over the past two years.

Yang Yuanqing, the chairman and chief executive of Lenovo, said in November that the division was entering a period of "hyper growth", as it started shipping a range of models in India, Indonesia, the Philippines and Vietnam.

Lenovo, which operates in more than 160 countries, last May unveiled a 5 billion yuan (HK$6.16 billion) investment programme that will see it build an advanced manufacturing plant for smartphones, media tablets and other mobile internet devices in Wuhan, Hubei province. Operations at this facility, which is expected to create nearly 10,000 jobs in the next few years, will begin in October this year.

The company's share price was up 5.18 per cent yesterday to HK$8.53, the stock's highest close since reaching HK$8.93 on August 1, 2000.The company will report today its financial results for the quarter to December 31.

Sandy Shen, the Shanghai-based research director for consumer services at Gartner, said: "It might take a while before we see Lenovo delivering substantial volume for the global mobile phone market".

She said Lenovo could pursue acquisitions to ramp up its global expansion in the mobile phone market.

"Lenovo has the advantage of leveraging the extensive distribution channel of its personal computer business," she said.