The PC market is a tough place even for the world's largest maker of the increasingly commoditised gear. Lenovo Group this week boasted a 36 per cent jump in profits last quarter, a number that masks a troubling decline in PC sales and stagnation in Lenovo's market-leading laptops.
Lenovo announced earnings of $220m (£137.55m) for the quarter that ended on 30 September with revenues up 13 per cent from last year to $9.8bn. The harsh reality, however, is that much of that windfall was powered by a near doubling in the sales of smartphones and tablets.
When it came to PCs and laptops, an area of traditional strength for the Chinese vendor, the news was pretty bleak. Sales of desktops dropped three per cent to $2.7bn, while laptop sales climbed a tepid eight per cent to $5bn.
Compare that to the sales of Lenovo smartphones and tablets, which skyrocketed 106 per cent from a year ago to $1.5bn. That means sales of mobile devices now account for 15 per cent of Lenovo's total revenues, up from nine per cent just one quarter ago.
Such is the way of the IT world now, said Lenovo officials, who added that they expect an increasing share or their revenues and the majority of profits to come from mobile devices going forward.
"Tablet growth continues shifting to mainstream and entry-level segments, as well as emerging markets. These are Lenovo's strength areas," Lenovo's chairman Yang Yuanqing said "We are confident that we will capture these opportunities and continue our strong growth.
"We are optimistic about the industry's outlook," Yang added.
IDC last month noted yet another drop in global PC sales, which were down 8.6 per cent in the third quarter. Weak demand in for new desktops and notebooks in an unusually quiet back-to-school season, as well as the continued end user preference for tablets, is to blame, the analyst firm said.
Lenovo has been girding itself for the sea change in the end-user devices market of late, even tapping Two and a Half Men star Ashton Kutcher as its newest product engineer. The popular actor is said to be working with the company's global engineering teams to develop and market Lenovo's Yoga line tablets, providing input and making decisions about the Yoga devices' design, specs, applications and use.
The Lenovo announcement came just days after Taiwanese gear vendor Acer announced a restructuring plan and the resignation of its chief executive J T Wang, following worse-than-expected financials for its third quarter.
Acer said it plans to cut its global workforce by seven per cent from next year, to generate $100m in savings annually. The company posted an 11.8 per cent drop in revenue for Q3 to $3.11bn, and an operating loss of $86.6m, blaming, in part, the impact of gearing up for selling units loaded with Microsoft's Windows 8.1 along with the churn in the PC and laptop market in general.
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