After entering the summer promotion in June, Lenovo’s engineers were extremely busy. A Lenovo engineer told the Beijing News reporter that they had to work overtime every day until 9:00 pm. The reason was that they not only solved the problems encountered by users when using the products, but also Provides a 'Chicken Eater' play service for users who have booked a game notebook. 'Eat chicken' is a popular competitive shootout game in recent years. This kind of game has high performance requirements for the player's PC. The game notebook is considered as There are few product lines that can drive sales of PC products.
In the opening match of the Jingdong 6·18 Shopping Festival recently, Lenovo took the lead in sales of notebooks, but the crown of game titles was taken away by old rival HP. In the battle for new users of gaming notebooks, Lenovo seems to be lagging behind its old rivals.
According to the data, in the first quarter of 2018, HP's shipments in the quarter increased by 4.3% year-on-year to approximately 568,000 units, Lenovo only increased by 5,000 units. IDC report from a third-party organization shows that Lenovo’s rival Hewlett-Packard Co. has had five consecutive quarters Leading global shipments, the second leading Lenovo has been expanding for three consecutive quarters.
At the Lenovo Global Sworn Conference in April, Yang Yuanqing, Chairman and CEO of Lenovo Group, announced that Lenovo’s PC business will return to the first place in the coming year. As Lenovo’s most important cash cow business, Lenovo’s PC is in urgent need of a victory to prove itself. .
Market share: Lenovo is getting farther away from HP
Lenovo once became the global PC leader for 12 consecutive quarters. The 12 quarters were also a glorious moment for Lenovo. The media had been reported to be very busy. However, HP has been biting Lenovo. The difference between the two has always been maintained at 1 percentage point. IDC Report Shows that the difference between the market share of the two companies is only 0.1 percentage point at the least, which is less than 70,000 units worldwide.
In the first quarter of 2017, with the complete product line and the strong growth of notebook products in all regional markets, Hewlett-Packard completed the go-ahead and led Lenovo by 1.3%. For such a gap, many respondents in the industry stated that as long as one of them reduced the price Promotions can be achieved beyond. At that time, Lenovo did not show panic, its officials still stressed that 'Lenovo's PC business is very healthy', and Chairman and CEO Yang Yuanqing also stated that 'do not care for a moment, the gains and losses of the matter'.
From then onwards, HP continued to lead Lenovo in four quarters, and its leading edge continued to expand. By the first quarter of 2018, HP had led Lenovo by 2.2 percentage points.
Compared with Hewlett-Packard, Lenovo still chooses multi-line business in parallel. Despite ushering in the best business and report in the past three years, Lenovo’s transformation has not seen much improvement in terms of revenue and structure of each business, advantages and challenges. No essential changes have taken place.
In May 2018, Lenovo released its annual report for the last fiscal year, which showed that it was affected by the new US tax law, which made a one-time provision of US$400 million, which also caused its annual loss of US$189 million. The rise in upstream costs has affected profits.
Analyst Liu Xueyan, an analyst from third-party consultancy IHS, told the reporter that the PC market is already a very mature market. Brands can only make high volume shipments by paying profits. Lenovo's current consideration is very practical. The first is to increase the unit price and stabilize sales. Only in this way can the profit level be improved.
A staff member of Lenovo who participated in the strategic study told the reporter that 'HP has won the entire war'. The strong commercial market has provided a strong backing for the consumer-grade low-end market impulse, and Lenovo’s strategy has given up part of its low-margin sales. .
As one of the commanders who won the war, Kevin Frost, Hewlett-Packard vice president and general manager of the consumer computer division, said in an exclusive interview with the Beijing News, 'We have found the needs of mainstream consumers and market growth, and Continuing attention and investment in the future', and the spin-off of the company two years ago, has made HP's market strategy more flexible.
Acquisition cannot solve Lenovo's PC dilemma
Lenovo has not had a price war with Hewlett-Packard for two years. From the perspective of product lines, Lenovo and HP have basically covered all price segments from 2,000 yuan to 30,000 yuan, so the performance of the regional market has become the key to the success of the two companies. .
To expand the market, Lenovo’s most common method is acquisition. In 2004, Lenovo, with a turnover of only 3 billion U.S. dollars, purchased the IBM PC division with a turnover of US$13 billion in 1.25 billion U.S. dollars and opened the global market. The elephant swallowing scene is still regarded as a classic curriculum case by the global business school. Since then, Lenovo has integrated NEC PC and Brazilian company Digibras.
In November 2017, Lenovo and Fujitsu set up a joint venture company to control Fujitsu's PC business. Liu Xueyan stated that the scale of Fujitsu is not large and Lenovo’s acquisition is for the market. Other insiders told the reporter that Lenovo’s executive vice president Liu Jun needs to prove that he can Lenovo's PC business brought back the market first, and cooperation with Fujitsu is an important step.
However, Lenovo's integration of the business was not smooth. Prior to the acquisition of ThinkPad, it faced cultural conflicts and the departure of senior executives. As a result, Lenovo incurred enormous financial pressure in the next five years, and even suffered a loss of nearly US$100 million in early 2009. At the same time, although Lenovo has already bought part of its assets to feed itself, the brand is still operating independently.
A person working in Lenovo’s PC business told the reporter that several product lines were in parallel and did not really open up. In response to the competition of new entrants such as Xiaomi, Lenovo had created from the design of its existing product line. Small new series, but this does not change the company's overall operating strategy.
In fact, it is more difficult in the PC industry to rely on the acquisition of short-term refills. In 2001, HP completed the acquisition of competitor Compaq for US$25 billion. However, after the assets were merged, HP did not get the imagination of the market. Share, In the following two years, HP just barely maintained the original share of Compaq.
A number of interviewed senior HP reporters told the Beijing News reporter that the rapid growth of the business has benefited from the company's overall spin-off. In their view, the time needed to face the needs of different customers, the time the company deployed the resources It will become lengthy, and management costs will also rise. The industry believes that HP's business after the spin-off, in response to similar opportunities such as gaming notebook, faster response.
Wu Jun, author of the best-selling book “The Wave of the Tide,” analyzed in the book that companies that are at a disadvantage in the competition must have problems with its management and management. If these problems are not solved, the problems after the merger will double, and they will compete in the competition. More at a disadvantage, further losing market share.
Lenovo needs a faster product line
Giving up sales to increase profits was once the strategy chosen by Lenovo. However, at present, Lenovo, which is in the background of the decline, needs the PC to recapture the boss to boost morale.
In April 2018, Yang Yuanqing announced at Lenovo's Global Swearing Conference that Lenovo’s PC business will return to the top in the next year. The conflict behind this is that Lenovo has already passed the market stage of “small profits but quick turnover” and needs PC to maintain strong profitability. , continuous blood supply for other businesses.
In terms of market performance, Lenovo's global major regional market shipments are down year-on-year. According to Mikako Kitagawa, chief analyst of third-party consulting firm Gartner, quarterly results reflect Lenovo’s strategic shift from ensuring market share growth to securing profit margins.
Time stretched, HP's PC shipments have been growing for eight consecutive quarters. Zhuang Zhengsong, president of Hewlett-Packard China, told reporters, 'You can think of yourself as an integrated service provider, but you can also think of yourself as a weapon. Supplier's, the latter obviously needs a more rapid market response.
At the end of May 2018, Hewlett-Packard held a marketing campaign for its new generation of gaming notebooks that invited players and game players to participate in the game. Kevin Frost told reporters that he had come to a company that used to serve corporate customers. This is simply not to be imagined.
In line with this, the rapid expansion of HP's product line, especially the ultra-thin notebooks with stylish design and high-performance gaming notebooks, has yielded returns for HP. The net revenue in the latest quarter increased by 12% year-on-year. Net profit increased by 89% year-on-year.
Lenovo also chose to launch products with different configurations and prices in different regions, but it failed to address the real needs of the market. The above-mentioned Lenovo Chinese staff told the reporter that Lenovo had released a high-end notebook with a price of nearly RMB 20,000 in the Chinese market, but sales mediocre.
The worker said that due to the limitations of upstream purchasing capacity, Lenovo's configuration is often three months behind HP, which has affected the market's sales, customer service can only continue to appease consumers. Even if the same configuration of products on the line, because HP adopts more A good screen, Even if the final selling price exceeds Lenovo's RMB 500, consumers still choose to abandon Lenovo and turn to HP.
Can Cloud +AI solve the Lenovo PC dilemma?
In 2017, in the event of a major downturn in PC's main business, Lenovo announced high-profile announcements in the field of artificial intelligence. Yang Yuanqing said at the Innovation and Technology Conference that the company wanted to adopt the 'device + cloud' and 'infrastructure + cloud' enabling industry and Industry, and announced the establishment of AI Innovation Center in Beijing, China, Morrisville, USA, and Stuttgart, Germany.
Yang Yuanqing even expressed his position to let Lenovo become the world’s top three data centers. Lenovo announced at the time that it had 9 data centers in the world with more than 2,000 servers. Globally, cloud computing service provider Amazon AWS had 3 million. Taiwan, and Microsoft has 2 million units, even Tencent and Alibaba Cloud have more than 500,000 servers.
For Lenovo, these ideas will undoubtedly require a huge amount of financial support. The financial report shows that its R&D expenses decreased by 8.7% and 6.5% year-on-year from 2016. Its R&D and capital expenditure decreased by 10.2% year-on-year in fiscal year 2017/018, In the same period, Amazon’s growth rate was 45% year-on-year, Google’s growth was 23% year-on-year, Microsoft’s growth was 6% year-on-year, and Apple’s growth was 5% year-on-year.
From the perspective of the overall industry development, this is a long marathon. For no other reason, the PC market is still declining. The IDC report predicts that in 2018 this market will drop by 3.5% year-on-year, which is more than 2.7% in 2017. At the same time, from the point of view of the regional market, none of the households have taken all of the markets.
In other words, HP's strategy is only to make it short-term lead.
In order to maintain its advantages, Kevin Frost told reporters that HP plans to make investments in cloud services, artificial intelligence, VR, and 5G networks. Only in this way can we continuously meet the needs of consumers. Among them, cloud services will help users complete the switching of different screens. The voice interaction and 5G will bring new user experience.
Lenovo also has a similar plan. Yang Yuanqing once said that Lenovo has shifted from focusing on personal computers to focusing on personal computing devices, and to the development of personalized devices and personalized clouds, 'We want to compete with our competitors in this direction for a long time' .
Beijing News reporter Liang Chen