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Lenovo lines up desktop brands to lure Indian consumers

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wants to concentrate on growing its desktop business in India.

Towards this end, it is expanding its desktop line with its consumer-focused IdeaCentre series, which competes head-to-head with popular budget PCs from Dell and HP.

These systems are performance players and also host features like an anti-bacterial keyboard and face-recognition security. Analysts say the desktops mark a significant departure from the bland aesthetics of Lenovo’s well-known business systems.

While it’s a household name in the Dragon Land, it also consistently figures among the top three desktop PC vendors in India. Its marketshare of around 6 per cent, however, is just half that of the leader, HP, and it trails Indian player HCL Infosystems.

But over the last couple of years, the growth of laptops has outpaced that of desktops by leagues as they become cheaper by the year and more attractive for young consumers who favour mobility.

Moreover, growth in the desktop shipment for the April-June quarter of CY08, according to research firm IDC, dropped by 2.4 per cent year-on-year, while the laptop shipments grew 51 per cent over the same period.

So why not concentrate on the laptop business, instead, which is growing at over 60 per cent? Lenovo is number two (leads and Acer is No.3) in the Indian laptop segment, according to IDC. The company is doing well with laptops. It got around 60 per cent of its total revenues from notebooks in FY08. For consumers, it launched the Ideapaq range.

Amar Babu, managing director, Lenovo India, explains that the growth in desktops will not be at the cost of laptops, “in which we are already strong players”. Lenovo has an approximately 50:50 desktop-laptop manufacturing ratio.

“India was the first country where Lenovo’s consumer brand was launched outside China. The laptop business, as the numbers show, is growing effortlessly. We can surely do better on the desktop front too. So we will also look at the desktop growth in smaller cities, where the penetration is low,” he adds.
 

ON THE GO
Company

Revenue

HP  2,500
HCL  2,060
Lenovo 1,306
Dell 1,021
Acer 565
Others 8,870
Total 16,332
Figures in Rs cr
Source: DQ estimates 
* Others include Wipro, Zenith, Xenitis, Chiragh, Sahara and Vesta besides assembled market

On the branding front, Lenovo PCs gained a mileage from the Beijing Olympics, where the company was a major sponsor. “India had a big role to play here,” says Babu, without elaborating. Lenovo also used the celebrity appeal of the likes of Saif and Soha Khan to promote the brand to consumers.

“Not only is Lenovo looking at India from a demand perspective, but it is also leveraging India as a competency centre for global marketing. Among all the other hardware players, Lenovo is taking a unique approach,” says Alok Shende, principal analyst, Accendia Consulting.

Lenovo also plans to launch servers (a market dominated by IBM, HP, Dell and Acer) in the second half of this year. The company is looking at a strategic partnership with IBM’s server range, which will be targeted more at small and medium enterprises (SMEs) and also at entry-level businesses.

Meanwhile, Babu says Lenovo will continue to invest in the country and grow the brand. “India is a very strategic and emerging market for us. China is not, since we were always strong there.”

Lenovo has two manufacturing facilities in India with a total capacity of 5 million units — one in Himachal Pradesh and the other in Puducherry. “Logistics is indeed a problem here. But we require these units to service the local market. We are in the process of improving our supply chain practices,” he adds.

Over the last six months, Lenovo lost many people to IBM. Babu, however, opines that the “new senior management team from across the industry will help us meet our goals”.

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