Lenovo creates a big mobile buzz

Written by Sudhir Chowdhary | Updated: Feb 24 2014, 20:51pm hrs
Lenova MobilesThe purchase of Motorola?s cellphone business will give Lenovo a bigger say in the booming smartphone market.
Its known in trade circles as the great Chinese invasion. We are referring to the flight of numerous mobile handset makers from mainland ChinaGionee, Huawei, Oppo, Lenovo, ZTEto grab large opportunities in the hyper-competitive Indian smartphone market. Samsung might be the most popular smartphone brand here, facing stiff competition from some of the homegrown brands such as Micromax, Lava, Karbonn, but it is the Chinese brands who seem to be capitalising on the strong customer demand for advanced touchscreen phones with faster processor, better camera with improved picture quality and long-lasting battery life at lower prices.

In particular, the $34-billion Beijing-headquartered Lenovo (another HQ is in Morrisville, North Carolina, US), which wants to be known as a PC+ brand in the marketplace. In a short span, it has managed to stand out in the domestic market with its aggressive business strategy in order to drive revenues in what it calls the PC+ segment comprising smartphones, tablets and convertibles. It goes without saying that smartphones are integral to its overall growth strategy.

Lenovo has put together a senior management team well versed with the Indian market, introduced a slew of mobile phones targeting the entire spectrum of the markettop level, premium segment, middle segment and the entry-level segmentand launched a focused branding and marketing exercise to strengthen its market share in India. The net result: company officials claim that Lenovo smartphones have been growing 100% quarter on quarter in India when the market is growing 15-20% in the same time period.

Lenovo is the worlds number one PC company, number two PC + tablet maker and number three smart connected device maker. It purchased its PC business from IBM in 2005, and has gone on to create a continually successful line of ThinkPad laptops from it. Recently, Lenovo announced that it will buy Motorola Mobility from Google for $2.91 billion in a mixture of cash and stock. It will give the Chinese smartphone manufacturer a major presence in the US market and within a year of the Motorola acquisition, Lenovo expects to sell 100 million smartphones worldwide. In 2013, Lenovo shipped an estimated 45 million smartphones, a 90% growth from the previous year.

Before we delve into the business strategy being deployed by Lenovo to capture peoples minds and hearts here, first a quick look at some of the striking trends from the countrys mobile landscape. According to recent IDC findings, the total shipments for smartphones in 2013 was 44 million compared to 16.2 million in 2012 with a growth of 175% year-on-year. A Gartner report reveals that globally, 53.6% of mobile phones sold in 2013 were smartphones. Thats a total of 986 million units, up 42.3% year-on-year. In India too, 2013 witnessed the first time decline in growth of feature phones and this trend is going to further sharpen in 2014 as the primary focus of the industry as well as consumers would remain around the smartphones.

Thats not all. Indias internet population rose to 238.71 million in 2013 helped by growing number of users especially in Maharashtra, Uttar Pradesh, Tamil Nadu, Gujarat and Andhra Pradesh. Device makers reckon that mobile internet is gaining traction among consumers in India and seven out of eight access the internet from their mobile phones.

India is the second most digitally connected country in the world after China with an internet population of 243 million (expected by June 2014). Nearly half of this population falls in the age group of 18-24 years and constitutes of mobile internet users. The young and tech-savvy people are opting for the latest devices that can perform multiple functions, says the Lenovo director for smartphone business in India, Sudhin Mathur. According to him, India is set to become the third-largest market for smartphones in 2017. The number of smartphone users in urban India will cross 104 million in 2014 compared with 51 million users in 2013.

In emerging markets such as India, the mobile phone is often the only technology device consumers have; hence they try to get as much value from it as possible. The mobile is the users primary means of entertainment through music and games, the primary means of capturing and sharing memories and their primary business tool, says Mathur. Nowadays, touchscreen phones are gaining precedence over handsets with physical keyboard, both in the urban and rural markets. There is also a surge in consumers upgrading from feature phones to smartphones. Fact is, consumers in India not only give preference to price but also look up to a trusted brand for making their purchase decision. These are the factors going in our favour, he adds.

Modest beginning

Lenovo smartphones test piloted in November 2012 in some of the Southern cities and Gujarat, where already Lenovo had a strong presence. The journey for Lenovo smartphones in India

began from June 2013 when six smartphones were launched with K900 leading the pack. In these last 8-9 months, Lenovos focus was three-fold: First, to create awareness about Lenovo smartphones; to expand the consumer horizon by bringing in technology innovation in smartphones (currently there are 12 products). Second, to set up a full-fledged distribution strategy. For this, Lenovo has partnered with two national distributors and there are now more than 100 city distribution partners; Lenovo has presence in 7,000 retail outlets. Next focus was to put up customer service network into the market: For this, Lenovo has tied up with HCL; there are 250 service centres with presence in 110 cities.

Lenovo has followed a three-pronged approach towards achieving this milieustrong product line-up, aggressive marketing and robust distribution network, says Mathur, who holds 20 years of experience in business management and consumer marketing, and is responsible for steering Lenovos aggressive growth strategies for smartphones in India.

According to the Lenovo smartphone business head,

senior management at the parent company has identified India as a high growth market for the companys future growth. Lenovo expects to garner 5% share of the smartphone market in the country in the next few years. It intends to launch a number of devices to consolidate its presence in the Indian market.

Mathur says that Lenovo is the only MNC in Indian market which has products ranging from R4,000 to R36,000. It comes up with new products every three months. Lenovo believes in creating a higher level of consumer, by coming up with varied products catering across categories. Lenovo India has more than 2,000 people working exclusively on smartphones, though not all are direct employment. The company has also been investing heavily on

retail. It has opened 1,200 Lenovo exclusive stores in the country.

The market worldwide has trended towards smartphones and India is no exception. Lenovo has been quick to grab the mobile opportunities here.