Apple Overtakes Lenovo in China Sales

Robin Kwong in Taipei and Paul Taylor in New York

Apple’s sales in greater China have for the first time overtaken those of Lenovo, the world’s third-biggest personal computer maker by shipment volume, results from the two companies confirm.

People queue to buy iPad 2 at an Apple store on May 6, 2011 in Shanghai, China.
Getty Images

Lenovo , which was the PC industry’s fastest-growing company for the seventh consecutive quarter, said on Thursday that its China sales rose 23.4 percent from a year ago to $2.8 billion, enabling it to consolidate its position as the PC market leader in China, said Yang Yuanqing, chief executive.

However strong demand for iPhones, iPads and Mac computers pushed up Apple’s second-quarter sales in greater China, which includes Hong Kong and Taiwan, sixfold from a year ago to $3.8 billion.

Lenovo groups its Hong Kong and Taiwan sales separately from the mainland, under the “emerging markets” category, which also saw strong growth over the past quarter. But for Lenovo to even match Apple’s revenue for greater China, analysts say it would have to have notched up sales in Hong Kong and Taiwan of at least $1 billion.

Jenny Lai, head of Taiwan Research at HSBC, said Lenovo’s sales in those two markets “would not be enough to make up the $1 billion gap”.

But Mr Yang, speaking to the Financial Times in New York, rejected the comparison. “That is not an ‘apples to apples’ calculation,” he said. “Their calculation includes the phone business but Lenovo’s main focus is in PCs, our phone business isn’t that strong even in China.

“If you compare the PC business we still have a lead far ahead of any of our competitors,” he said, noting that Lenovo’s share of the Chinese PC market increased in the latest quarter by 2.3 percentage points to 31.7 percent.

Indeed, the Chinese company remains one of the few bright spots in a global PC industry tarnished by lacklustre consumer demand in Europe and the US. Revenue in the second quarter rose 15 percent to a record high of $5.9 billion, while profit attributable to shareholders nearly doubled from a year ago to $108 million.

Lenovo gained market share across all regions and last quarter overtook Acer to take the world number three spot, according to IDC.

“Our aspiration is gain market share and to continue to outgrow the market,” said Mr Yang. “We want to become the leader in this industry and I believe that is definitely achievable, that is our aspiration.”

Even in North America, Lenovo saw its shipments rise 30.8 percent from a year ago against a 4 per cent decline in the overall market.

Liu Chuanzhi, Lenovo chairman, said the US market has “already become an important pillar of Lenovo’s profits”, compared with a $9 million loss a year ago.

“What a difference a year makes,” he said.

Lenovo declined to give specific guidance on second-half shipments or sales, but Mr Yuan said the company remains “optimistic” about the outlook for the rest of the year. He noted that “emerging markets, including China, continue to grow and outpace” the overall PC market, while in mature markets the corporate PC replacement cycle “remains strong and consistent”.

Lenovo also said it would begin to see contributions to its results in the next quarter from its acquisition of Germany’s Medion, and its joint venture in Japan with NEC.

Its optimism was in stark contrast to Dell, which earlier this week slashed its revenue forecast for the second half, citing delays in government spending and tepid consumer demand.

Investors appeared to side with Dell’s prognosis, sending Lenovo shares down 6.5 percent in Hong Kong trading on Thursday.