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Lenovo smartphones may return to profit by 2017

Lenovo smartphones may return to profit by 2017
Lenovo smartphones may return to profit by 2017
The Chinese manufacturer is having high expectations for its smartphone division due in part to the company's superior international presence compared to Vivo, Oppo, and others.

The smartphone market is akin to an aquarium filled with piranhas: Any new or smaller manufacturer will instantly be eaten alive by larger fish and not be allowed to grow. In this case, Apple and Samsung reap nearly all the rewards in the smartphone market and the best that other manufacturers like Huawei can hope for is third place.

Lenovo in particular has been in an interesting spot. Its smartphone market collapsed by as much as 75 percent in China during Q1 2016 and the manufacturer was once the third largest when it acquired Motorola in 2014 for $2.9 billion USD. Other smaller manufacturers have been eating into Lenovo's sales including Xiaomi and Oppo in Asian territories.

Lenovo's smartphone business was not meeting expectations as early as Q1 2015 and the company lost $114 million USD just this past quarter. While not as deep in the red as previous quarters, a turn to profit sooner rather than later seems unlikely.

Despite all the odds stacked against it, Lenovo chief Yuan Yuanqing expressed in an interview with the DPA press agency that the company's smartphone division can return to profit by 2017. One of its core strategies will be to utilize the Moto branding for all its future smartphones. As for its rising competitors like Xiaomi and Oppo, Yuanqing does not believe they can continue growing at their current rates due to their limited presence in international markets. Lenovo should also be able to benefit from the Galaxy Note 7 recalls and Samsung's continuing PR issues.

Whether or not Lenovo can turn things around remains to be seen. Competing manufacturers like HTC and LG have had low sales of their respective 2016 HTC 10 and G5 flagship smartphones.




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Allen Ngo, 2016-11-24 (Update: 2016-11-24)