Lenovo confident of closing PC mkt gap with HP

HONG KONG Thu Oct 13, 2011 11:11am IST

Customers talk to a salesperson about a new laptop at a Lenovo shop in Shanghai February 17, 2011. Lenovo Group Ltd is confident of closing the PC market share gap with leader Hewlett-Packard Co through acquisitions and a strong product mix, after claiming the global No.2 spot, Chief Executive Yang Yuanqing said.REUTERS/Aly Song/Files

Customers talk to a salesperson about a new laptop at a Lenovo shop in Shanghai February 17, 2011. Lenovo Group Ltd is confident of closing the PC market share gap with leader Hewlett-Packard Co through acquisitions and a strong product mix, after claiming the global No.2 spot, Chief Executive Yang Yuanqing said.

Credit: Reuters/Aly Song/Files

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HONG KONG (Reuters) - Lenovo Group Ltd is confident of closing the PC market share gap with leader Hewlett-Packard Co through acquisitions and a strong product mix after claiming the global No.2 spot, its chief executive, Yang Yuanqing, said on Thursday.

Despite the confidence, analysts say Lenovo has some way to go before it can take the top spot because the Chinese PC maker would need to make key acquisitions and more aggressive sales in the tablet market.

Lenovo, one of China's best-known consumer brands, became the world's second-largest personal computer maker in the third quarter for the first time with a market share of 13.7 percent, surpassing Dell Inc's 12 percent and ranking behind HP's 18.1 percent, research firm IDC said. Research company Gartner also reported the same rankings.

"Definitely, we will continue to outgrow the market. If we outgrow the market, we will gain market share," Yang told Reuters in an interview.

Lenovo's Hong Kong-listed shares were up 2.1 percent at 0320 GMT on Thursday after rising as much as 2.5 percent in early trading, outpacing the Hang Seng Index's 1.8 percent advance.

Lenovo's advance comes after HP named a new CEO, Meg Whitman, and amid market uncertainty on what HP will do to its PC business. It earlier announced it may spin off the PC business and recently has said it might retain the business.

Earlier this year, rival Acer Inc also went through an overhaul at the top, replacing its CEO Gianfranco Lanci after he clashed with management on various issues including its tablet strategy. Lanci is now a Lenovo consultant.

While analysts expect Lenovo to grow its market share, it will likely happen only gradually.

"It will still be quite challenging to Lenovo to surpass HP, unless it makes more acquisitions along the way," said Angela Hsiang, an analyst with KGI Securities. "HP and Acer were undergoing some changes within the companies, so Lenovo managed to take away some market share from them."

Traditional PC makers have seen tablet PCs, where Apple Inc has the lion's share of the market now, taking away business from laptops and desktops, particularly among increasingly Internet-savvy consumers.

Yang said Lenovo aimed to increase its domestic market share for smartphones and tablet computers with its LePhone and LePad. Apple's hugely popular iPhone and iPad have the biggest market share in China.

Within China, Lenovo also faces competition from other key players such as network equipment makers Huawei Technologies and ZTE, which have been aggressively marketing their gadgets with lower price points.

"We want to make sure we succeed in China first, then we'll replicate that in the rest of the world. We view ourselves as not just a PC company, but also an internet devices company."

Lenovo plans to continue making acquisitions to expand, with analysts saying it will have to be more aggressive in the fast-growing smartphone and tablet markets as consumer preferences turn to easy-to-carry devices.

"We are interested in any acquisitions that help us realise our strategy. Acquisitions have become a very valuable tool. We have had a couple of successful purchases," Yang said.

This year, Lenovo entered a joint venture with Japan's NEC Corp and announced the acquisition of Germany's Medion AG, its biggest purchase since buying International Business Machines Corp's PC business six years ago.

"We are definitely interested in emerging markets as well. It depends on whether we can find the right target," Yang said.

(Editing by Chris Lewis and Matt Driskill)

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