“How can Lenovo effectively leverage its recent
acquisition of Motorola Mobility from Google to
compete against Apple, Samsung, and other
established companies in the U.S. Smartphone
market?”
By Arindam Bhattacharya
Jacob Catalano
Colton Lutterloh
Travis Sickler
Sharaf Tamimi
Kyle Turner
Company Overview
•
1984 – Legends Holdings Inc. founded by 11 Chinese engineers
•
1988 - Incorporated in Hong Kong
•
1990 - Introduced it’s first personal computer
•
1999 - Became the leading seller of PC’s in Asia-Pacific
•
2004 - Renamed to Lenovo
•
2005 - Acquired IBM’s Personal Computing Division
•
2010 – Introduced the LePhone in China
•
2012 – Expanded its smartphone business internationally
•
2014 - Acquired Motorola Mobility from Google Inc.
Company Overview
• Current CEO: Yang Yuanqing
•
Offers a variety of products
• Sales doubled from 2010($17 Bil) to 2013($34 Bil),
and profits increased 500% during that time
• The primary supplier of computers in China with 36.7%
market share
• Recently overtook HP as the largest suppliers of PC’s
worldwide
• Grown to own 13% market share of the Chinese smartphone
industry
• Currently 95% of smartphone sales come from China
Case Description
• The Chinese smartphone market is expected to
decelerate after 2014.
– Purchase of Motorola Mobility
• Apple(42% market share) and Samsung (27%
market share) dominate the U.S. smartphone
market .
• Motorola owns 6% of the U.S. market, just behind
LG at 7%
Case Description
• Even though Motorola has fallen since the incredible
success of the Razr, it is still known for mobile handsets.
• Along with the recognizable brand identity, the Motorola
purchase was a steal at $2.9 billion.
• Lenovo’s hardware knowledge paired with Motorola’s
expertise and experience in the smartphone market
creates optimism for the future.
Case Description
• With that optimism, Lenovo has set lofty goals,
expecting more than 100 million smartphone sales
per year.
• It plans to battle Apple and Samsung using low-cost
manufacturing with lean operations to produce a
broader Motorola product line.
• This strategy has worked for Lenovo before with
IBM.
Smartphone Industry—The Future
• U.S. mobile consumers are quickly switching to smartphones.
• Still lots of room for growth, however.
Smartphone Industry—The Future
• In 2013 there were about 140 million smartphone users in the U.S.
• Lots of growth is projected for the future. By 2017, the number of users is
expected to grow by 50% to 207 million users.
Smartphone Industry—The Future
• Room to grow in U.S. Market
• By acquiring Motorola, Lenovo can leverage a big American name
synonymous with smartphones.
• Lenovo has expertise in hardware, low-cost strategies, and has
potential partnership with Google.
Lenovo SWOT Analysis
Strengths
Weaknesses
Ranks 3rd in 2013 Smartphone sales
Strong Base in China
Low Production Cost
New in Global Market
Product Sales
Opportunities
Threats
International Development
Growth in the tablet market
Growth in the Smartphone market
Competition
Reputation
Keeping up with technology
Competition - Apple
• The main supplier of Apple
would currently be Hon Hai
Precision Industry Co., which is
also known by most as
Foxconn.
• Apple added Flextronics to
head their manufacturing of
Mac computer devices in
Austin, Texas.
Competition - Samsung
• Samsung low cost resources and labor.
• Even though Apple iPhone sales for 2013
grew to “a record 51 million” in sales,
“Samsung's fourth quarter [for 2013]
smartphone shipments” were recorded
at “86 million” sales. Also “reportedly,
[Samsung] shipped some 319.8 million
smartphones” while Apple reached only
153.4 million smartphones.
Recommendations – Manufacturing
Lenovo
• Manufacturing in China
• Low cost
• Option to customize
• Lenovo has been competing in price
advantage in the Chinese smartphone
Market with the Lenovo S898T.
Recommendations - Demographics
• Demographics data indicates a
correlation between income
and smartphone possession
• Largest potential for future
growth
• Age Group
• Low cost, simple product
design
Recommendations - Differentiation
• Lenovo should differentiate
themselves from their primary
competitors when trying to
enter a new market
• Expand on Motorola’s “mass
customization”
• Low cost product
Recommendations Manufacturing
•
Motorola has strong presence
•
Initially, maintaining a U.S. based
manufacturing facility provides rare,
fairly inimitable marketing and
reputational benefits
– Allows Lenovo to differentiate its
Motorola products from
competition
– Avoids some of the negative
associations with overseas
manufacturing (e.g.
Apple/Foxconn)
– Reduced turnaround and delivery
times due to U.S. location