The Chinese company, with headquarters in Beijing, Singapore, and Morrisville (U.S.), and more than 27,000 employees globally, now has a 14.9% share of the global market, compared with 15.5% for HP, according to figures from IDC, the research company.

Lenovo beat industry estimates with sales increase of 35% to $8 billion in the quarter ending June 30, 2012, and quarterly net profit rose 30% from $108.8 million to $141.4 million.  Of the US$29.6 billion revenue so far for 2012, 58% has been earned outside of China.

Lenovo’s unit sales in the U.S. grew 6.1% in the 2^nd quarter compared to a 10.6% decline for the overall U.S. PC market.  According to IDC, Lenovo now has a 8% market share in the U.S., its largest ever.  The increase came at a time when the PC market overall has stopped growing, with consumers more interested in spending money on smartphones and tablets.  In July, figures from Gartner Research showed a 0.1% decline in overall global sales.

Lenovo was founded by Liu Chuanzhi with a group of 10 engineers in Beijing in 1984 with 200,000 yuan in startup capital.  It was incorporated in Hong Kong in 1988 under its previous name, Legend.  In 1994, Legend became a publicly traded company after listing on the Hong Kong Stock Exchange and raising nearly $30 million. The company name was then changed to its current name in 2003 and millions of dollars were spent in the rebranding campaign.  Lenovo’s acquisition of IBM’s PC business in 2005 accelerated its access to foreign markets as well as improved its branding and technologies.  Lenovo inherited from IBM the ThinkPad line of notebook computers, but it eventually launched its own IdeaPad line of laptops and IdeaCentre desktops in 2008.

“The company’s growth can be attributed to a number of factors, primarily aggressive pricing strategies, overseas acquisitions as well as strong sales in China.  Unlike its competitors HP, Dell and Acer, Lenovo’s decision to focus on sales rather than on profit margins explains why its operating margin is only 1.4%, compared to Dell’s 6.2% and HP’s 7.4%,” said Andrew Tsang, a research analyst at Companies.asia Consulting.  “Lenovo also benefits from their strong sales position in the China market. Their market penetration in China’s countryside and smaller cities is higher than other computer companies.  The PC growth rate in these cities is still double-digit, which is why Lenovo is able to beat the industry average.”

In 2011, Lenovo acquired control of Medion AG (FWB: MDN), an Essen, Germany-based electronics and computer manufacturer, to bolster its European market position; it also took control of the PC division of Tokyo-based NEC Corp. (TYO/OSE: 6701) by structuring a joint-venture deal.  “We plan to become the world’s biggest PC maker,” Chief Executive Officer Yang Yuanqing said in October 2011.  In all likelihood, he may well accomplish this by the end of this year.  Yang is also stepping up development of smartphones, tablets and Internet-ready televisions to widen Lenovo’s product line for consumers, and plans to offer a new cloud computing service which would allow users to manage information and exchange content between multiple devices.

Copyright © 2013  Companies.asia   All Rights Reserved.

In 2010, IBM’s consulting and technology services generated gross margins of 32%. The company’s software business, which accounts for 20% of revenue, had margins of 88% in the 3rd quarter of 2011. IBM also owns more patents than any other US based technology company. It invested $6 billion in R&D in 2010, the equivalent of 6% of its revenue, compared to $3 billion, or 2.4%, at its rival Hewlett-Packard.

The areas that IBM is focusing on now – cloud computing, analytics and emerging markets are part of its carefully planned strategies for global growth.

Earlier this year, IBM announced a $38 million investment to build a new Asia-Pacific Cloud Computing Data Center in Singapore to exploit the potential of cloud computing through its comprehensive solutions and services. The new facility in Singapore will extend IBM’s globally integrated cloud delivery network that includes centers in Canada, the United States and Germany. The company also has 13 global cloud labs, of which seven are based in Asia-Pacific countries namely China, Singapore, Korea, Japan, Hong Kong, Vietnam and India.

Another cloud computing data center will be built in Langfang, a city near Beijing, under the collaborative efforts between IBM and the China-based Range Technology. The 620,000 square meter facility, which is to be owned by Range Technology, is scheduled to be completed in 2016. The data center, the largest in Asia by floor area, aims to serve mainly government departments from Beijing and across the country, but will also be open to major banks and private enterprises throughout China. According to IBM spokesperson Harriet Ip, the center is also designed to support the development of a new information technology hub being built in the area.

IBM’s data-center business in China has tripled in the last four years. In 2010, China overtook Japan as IBM’s second largest data center market, with the U.S. as the company’s number one market. Moreover, the Asia-Pacific market for cloud computing is set to grow 40% per annum through 2014 to $4.9 billion, according to IDC Asia Pacific. IBM is well positioned to take advantage of this growth by establishing regional data centers that will provide the necessary infrastructure for growth of key cloud computing areas.

IBM is headquartered in Armonk, New York. As of September 2011, IBM is the second-largest publicly traded technology company in the world by market capitalization. In 2011, Fortune ranked IBM the 18th largest firm in the U.S., as well as the 7th most profitable. Globally, the company was ranked the 31st largest firm by Forbes for 2011, and 18th most innovative company by Fast Company. IBM employs more than 427,000 employees in over 200 countries, with occupations including scientists, engineers, consultants, and sales professionals.

For 2010, IBM’s brand was valued at $64.7 billion. IBM’s closing value of $214 billion on September 29, 2011 surpassed Microsoft which was valued at $213.2 billion. It was the first time since 1996 that IBM exceeded its software rival based on closing price. However, IBM’s value is still less than two-thirds of Apple’s value of $362.1 billion.

Though faced with strong competitors such as Oracle Corp. (NASDAQ:ORCL), Hewlett Packard Co. (NYSE:HPQ), Microsoft Corp (NASDAQ:MSFT) and EMC Corp (NYSE:EMC), IBM is still viewed by many industry analysts to be a heavyweight in the cloud computing market. Its strong cash balance will no doubt help it acquire more companies with high intellectual property assets, which will drive further growth in the upcoming quarters. New CEO Virginia “Ginni” Rometty says that despite IBM’s deep pockets and $100 billion in 2010 sales, she plans to keep pressing her management team to take more risks and embrace change. “Whatever business you’re in, it’s going to commoditize over time, so you have to keep moving it to a higher value and change”.

Copyright © 2011 …Companies.asia ….All Rights Reserved.