Lenovo 2010 Annual Report Download - page 22

2009/10 Annual Report Lenovo Group Limited
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MANAGEMENT’S DISCUSSION & ANALYSIS
Worldwide consumer PC demand remained resilient
during the year despite the economic slow-down
Notebook demand continued to show strong growth
while demand for desktops shrunk as the trend to
replace desktops with notebooks continued with ever
closer price points. Meanwhile, Lenovo’s All-in-One
products continued to show strong growth within the
desktop category. The average selling price continued
to shift lower, resulting in margin compression.
In mature markets such as North America, the trend
towards multiple PCs per household and the tendency
to replace desktops with mobile notebooks at lower
price points has been the key driver for consumer
products. In contrast, emerging markets consumers
are more typically first time PC buyers, particularly
among a younger generation looking to purchase a
PC for education purposes.
The Group continued to expand its coverage of the
worldwide consumer and SMB markets during the
2009/10 fiscal year with 46 new products across
notebooks and desktops, covering everything from
entry level to extreme performance price-points. In
addition, Idea branded products were a key part of the
Group’s expansion of its transaction business model
from 22 to 86 countries. These new products received
extremely favorable market response based upon rapid
growth in portfolio coverage, improved time to market,
and supply chain efficiency.
The Group’s innovative products won major industry
awards at the CES 2010. Lenovo’s hybrid notebook
IdeaPad U1, representing an industry first, was
awarded Best of CES Computer & Hardware from
CNET & CEA and Best of CES Notebook from Laptop
Magazine. The Group announced the world’s first
ARM-based smartbook, Skylight, which was awarded
Best of CES MID/Smartbook and Best of CES Best
Mobile Device from Laptop Magazine and Computer
Shopper respectively.
Mobile Internet Group
The Group completed its reacquisition of Lenovo
Mobile at the end of January 2010, therefore only
included Lenovo Mobile’s two months performance
in the last fiscal year. The mobile handset industry in
China rebounded quickly with a substantial increase
in unit shipments during the year which benefited
from China's macroeconomic improvement, as well
as the release of China's 3G licenses and the official
launch of the 3G market. Lenovo Mobile continued to
show strong unit shipments growth after its launch of
a variety of cost-effective products in the operators
market, as well as a range of competitive products in
the open market. As a result, Lenovo Mobile grew 32
percent in unit shipments year-on-year and secured a
top-three market position during the year.
Notebook and Desktop
Lenovo posted material market share gains in both
notebook and desktop PC markets in the fiscal
year. The Group captured the strong growth in the
robust consumer notebook market with an expanded
consumer notebook product portfolio. Lenovo recorded
approximately 50 percent growth in unit shipments,
and its market share increased 1.3 percentage points
to 8.5 percent.
The Group’s desktop unit shipments also grew 7.8
percent year-on-year and its market share increased
1.1 percentage points to 9.1 percent. Although market
demand was shifting to notebook computers, the
recovery in commercial demand, Lenovo’s expansion
into transaction business with stylish All-in-One
consumer desktop and offering of SMB targeted
desktop continued to support its desktop growth.
RELATIONSHIP & TRANSACTION
BUSINESS MODELS
Lenovo’s relationship business began recovering
from the severe multi-year downturn in the worldwide
Lenovo’s smartphone lanuched in China