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Summary:

After dumping its mobile phone group in 2008, Lenovo bought it back for double in 2009. Now the company has formed a new Mobile Internet and Digital Home Business Group, just as computer sales are eclipsed by smartphones. Is it too late for Lenovo?

lenovo-u1

Lenovo today announced the formation of a new business group, the Mobile Internet and Digital Home Business Group (MIDH), which will focus on mobile and connected devices. The new organization is expected to design and deliver tablets, smartphones, smart televisions and connected home products.

The timing of the new mobile group comes hot on the heels of 2010 computer sales figures. The Gartner Group last week estimated 93.4 million personal computers were sold in the last quarter of 2010 and Lenovo accounted for 9.4 million of those. Such numbers boosted Lenovo’s quarterly market share by 21.4 percent compared to the year ago quarter. While personal computers will likely never go away, the future is in smaller mobile devices, as evidenced by sales of smartphones about to surpass those of PCs, if they haven’t already.

Sadly, Lenovo sold off its mobile division in 2008 for $100 million. That was the worst time to do so, as smartphone adoption was just picking up steam. The company realized its error and bought back the division a year later for $200 million. Normally, I’d say that repurchasing an asset for double is a mistake, but $200 million for a mobile business is cheap when you consider Apple is estimated to have earned $14.8 billion in gross profits from iPhone sales.

Lenovo hasn’t provided any specific product details for its new MIDH business group, which will be run by Liu Jun, the former president of Lenovo’s Product Group. The company has shown some innovative mobile products in the past, the most notable being the hybrid slate / laptop U1 shown at the 2010 Consumer Electronics Show (CES). The U1 was making the rounds at this year’s CES as well, with the biggest change coming from software: The custom Linux operating system is gone in favor of the more popular Google Android platform. Lenovo has also embraced Android with its handset portfolio, but focuses on selling the phones in China.

The new focus on mobile is a step in the right direction for Lenovo. If it didn’t make this move, it would risk losing relevancy in the future as consumers flock to more mobile devices such as smartphones and tablets. It’s a “better late than never” strategy, so now we have to wait for products to see just how late Lenovo is to the mobile game.

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  1. Zack Lee Wright Tuesday, January 18, 2011

    They have a chance, but not because of their poor management decisions. But because the mobile market is so very large and will accommodate more large players than the PC market. Normally such foolish/incompetent decisions would be irreversible in the fast moving tech industry but because phone market is so huge and has high product turnover rates, Lenovo most definitely has a chance, at least as good as Dell, HP and Acer.
    BTW, intel made the same doofus management decision when they sold their Xscale division (ARM processors). Just goes to show you how many incompetent people there are in the Tech industry, I run into them on a daily basis. LOL

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    1. True, even with a growing number of smartphones and tablets sold, there’s still tons more additional growth opportunity, so there’s still time. It’s going to depend on how well their products compare to the current and future offerings from those already in the market, IMO.

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  2. Lenovo is a chance to win market share in mobile devices, although it will be very difficult to do today. They need to sell products with the same parameters as those of competitors, but at cheaper prices

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