In 1984, with only US$25,000 in Chinese government funding and a dusty 20m2 bungalow as their headquarters, a small group of scientists in Beijing founded a firm called New Technology Developer Inc (新科技研發).
Thirty years later, the tech company — which went on to become Legend and later Lenovo Group Ltd (聯想) — is the world’s biggest PC maker, and has just completed two major deals with IBM Corp and Google Inc that analysts say will help it to diversify away from the sagging PC market and boost its expansion overseas.
Lenovo’s US$2.3 billion purchase of IBM’s low-end server business and its US$2.91 billion acquisition of Motorola Mobility from Google are evidence of the Chinese tech giant’s “global ambitions,” Jean-Francois Dufour at DCA Chine-Analyse said.
Photo: AFP
“Just as iPhones and iPads have overtaken Macs in commercial importance for Apple, smartphones and tablets are expected to replace PCs in part for Lenovo,” said Dufour, who called the firm “the pioneer of Chinese companies’ global offensive.”
The back-to-back deals are all the more significant because of their timing, coming just as US President Barack Obama said in his annual State of the Union address on Tuesday that “for the first time in over a decade, business leaders around the world have declared that China is no longer the world’s number one place to invest; America is.”
With Chinese investment in the US doubling to US$14 billion last year, a larger and larger share of that capital is coming from the US’ rival across the Pacific — a fact unmentioned by Obama in his speech. From its humble beginnings, Lenovo has charted an impressive course in the PC market.
Under its earlier name, Legend, it secured the biggest share in China’s domestic market in 1996 and in the Asia-Pacific region three years later. Its 2003 decision to change the name of its PC brand from Legend to Lenovo in a bid to boost its sales abroad marked the beginning of its ascent to global preeminence. That move was followed by a successful 2004 bid to serve as the exclusive computing technology provider for the 2006 Turin Winter Olympics and the 2008 Beijing Games, making it the first Chinese firm to become a major Olympic sponsor.
However, it was Lenovo’s 2005 acquisition of IBM’s PC division for US$1.75 billion that cemented its rise, setting it on track to unseat Hewlett-Packard Co as the world’s top PC vendor last year. Lenovo now has PC products in more than 160 countries.
With Motorola, Lenovo hopes to replicate its PC market success in the smartphone universe.
The deal “will immediately make Lenovo a strong global competitor in smartphones,” Lenovo chairman and chief executive officer Yang Yuanqing (楊元慶) said.
As it did after the 2005 IBM deal, however, it faces tough odds. Lenovo is the No. 2 smartphone maker in China with a 12.5 percent market share in the third quarter of last year, behind South Korea-based Samsung Electronics Co’s 18.4 percent. Globally, Lenovo ranked fifth in the same quarter, with only 4.5 percent market share. Its acquisition of Motorola is likely to bump it up to the No. 3 spot, Yang said, but it will remain well behind leaders Samsung and US tech giant Apple Inc, with 31.3 percent and 15.3 percent respectively.
Varun Goel, head of portfolio management services at Karvy Stock Broking, said that while Lenovo has succeeded in the world of PCs, the smartphone market is “a very different ball game, with entrenched players like Apple and Samsung leading the fray.”
“While Lenovo has expertise in hardware, today’s smartphone industry is driven by smarter software,” Goel said. “In the smartphone markets, Google’s Android platform has been gaining strength. There is very little differentiation that Motorola’s Android-powered phones currently have over Samsung, which uses the same platform.”
“We are not sure if this acquisition will add long-term value to Lenovo’s shareholders,” he added.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day
Thousands of parents in Singapore are furious after a Cordlife Group Ltd (康盛人生集團), a major operator of cord blood banks in Asia, irreparably damaged their children’s samples through improper handling, with some now pursuing legal action. The ongoing case, one of the worst to hit the largely untested industry, has renewed concerns over companies marketing themselves to anxious parents with mostly unproven assurances. This has implications across the region, given Cordlife’s operations in Hong Kong, Macau, Indonesia, the Philippines and India. The parents paid for years to have their infants’ cord blood stored, with the understanding that the stem cells they contained