Lenovo 2012 Annual Report Download - page 21

2011/12 Annual Report Lenovo Group Limited 19
IdeaPad Tablet
Mobile Internet Products
Seeing the growing demand for mobile
internet devices, Lenovo has been
driving its expansion into these new
devices through its MIDH Group, which
has seen very encouraging progress.
The MIDH Group is responsible for
creating mobile internet-focused
devices, including smartphones, feature
phones, and tablet products, as well as
new category devices like Smart TV. It
is also responsible for developing cloud
services and applications that will fuel
these next generation convergence
devices.
MIDH revenue accounted for 5 percent of the Group’s
total revenue. Lenovo’s mobile internet business recorded
strong growth in the fiscal year from strong demand in
mobile phone market in China. Total mobile phone unit
shipments including smartphones and feature phones
grew strongly and outperformed the market quarter after
quarter, helping Lenovo to achieve a record year in the
fiscal year 2011/12, with unit shipments grew 62 percent
year-on-year. The Group’s smartphones – especially the
entry level smartphones such as A60 – continued to
capture strong growth momentum and grew about 11
times year-on-year against the market growth of 1.8 times.
Lenovo’s market share in China smartphone increased by
8.6 percentage point from the fiscal quarter one to record-
high 9.5 percent in the fiscal quarter four, making its full-
year smartphone market share to reach 5.8 percent for the
fiscal year 2011/12, a 4.6 percentage point growth year-
on-year. At the fiscal year end, Lenovo was the number
four smartphone company in China. The traditional feature
phone market in China further shrunk by 6 percentage
year-on-year affected by the cannibalization of entry-
level smartphones. Nevertheless, Lenovo continued to
outperform the market with a solid unit shipments growth
of 11 percent. The Group’s market share in China’s feature
phone business increased by 1.6 percentage points from
last year to 6.9 percent.
In tablets, the Group rolled out a range of new tablet
products of different screen sizes, targeting both consumer
and commercial customers in China, as well as in certain
countries outside of China. The Group’s effective strategy
to focus on small-to-medium size tablets led to a growth
of 5.3 times of unit shipments for tablet products from the
fiscal quarter one, when the products were first launched,
to the fiscal quarter four. Lenovo was the number one
provider in Android tablet market in China, the number two
of overall China tablet market in the fiscal year 2011/12,
and has become the number four tablet vendor in the world
in the fiscal quarter four.
The Group has also planned for the launch of more new
smartphones and tablets products to transit successful
products to fuel future continuous growth. The Group just
announced in May the launch of the K-series Lenovo Smart
TV products, the first Google certified television product to
adopt the Android 4.0 OS in the world. With the launch of
Smart TV, Lenovo is now offering products across all four
screens – PCs, smartphones, tablets and Smart TV – that
definethecompany’slong-term“PC+”strategy.
GLOBAL SUPPLY CHAIN
Flooding in Thailand in 2011 led to a shortage of HDDs
and drove higher HDD costs for the industry in the second
half of the fiscal year under review. Responding to this
industry crisis, the Group took immediate actions to
mitigate the impact of the HDD supply shortage, including
demand conditioning, direct communications among
senior management teams at Lenovo and key HDDs
suppliers, allocation of HDD supply to high margin
products and strategic customers. The Group successfully
turned the industry crisis into an opportunity to continue
outperforming its industry peers. Lenovo secured product
supplies adequate to meet demand of the vast majority of
its customers, while making profitability its first priority. The
Group mitigated cost impact through flexible and effective
strategies, as well as stringent cost control, and scaling
benefit arising from strong shipment growth.
A60