"Rising" Huawei collides with "declining" Lenovo

"Everyone knows Huawei's character. We don't enter a new field easily. Once we enter a field, we must do the best."

At the Mobile World Congress (MWC2016) in Barcelona, ​​Spain, Huawei Consumer BG CEO Richard Yu accidentally revealed Huawei's "ambition". At 2 p.m. local time on the 21st in Barcelona, ​​Huawei officially announced its entry into the PC field and released the Matebook 2-in-1 computer.

How does Huawei play the abacus? There are many interpretations. "Many people think that the PC is almost a dead industry, but Huawei may not see it that way," telecom expert Zeng Tao told China Business News. According to Huawei's explanation, its entry into the PC business is based on its judgment of industry trends and the maturity of technological innovation.

Huawei is riding on the success of its mobile phone business, and its PC product line is directly colliding with the PC business of industry leader Lenovo. Does Lenovo have reason to worry?

PC hits bottom and will rebound

Huawei President Ren Zhengfei once said at the company's 2015 annual market work conference that Huawei's terminal sales revenue must dare to exceed US$100 billion within five years. However, at MWC2016, Yu Chengdong denied that Huawei opened up the PC business in order to achieve the five-year performance target, "We are not doing this to make up for the US$100 billion." So, what is Huawei thinking?

"We have been tracking this for about four years. The specific design of this product was started two years ago, and it has been a long time until its release today." Yang Zhirong, president of Huawei's Mobile Broadband and Home Business Unit, said in an interview with "China Business Daily" and other media.

As we all know, the rapid growth of consumer business has become the biggest driving force for Huawei's revenue growth in 2015. In the consumer business, its recently launched smart watch business is based on Huawei's judgment of the future. However, the smart watch business has not yet seen an explosion in the entire industry. The smartphone business is the pillar of Huawei's consumer business.

In 2015, Huawei's smartphone shipments reached a new high of more than 100 million units. However, according to the joint judgment of several consulting agencies, the global smartphone market will inevitably slow down from last year to the next few years. If the overall market declines, who will supplement or even replace the pillar of Huawei's revenue growth? Undoubtedly, Huawei has set its sights on PCs, a traditional IT product.

However, the current situation of the PC market is not optimistic. In the third quarter results of the 2015 fiscal year ending December 31, 2015, Lenovo ranked first in the global personal computer market for the eleventh consecutive quarter, with a global market share of 21.6%. However, even Lenovo cannot avoid the pressure of the overall slowdown in the personal computer market.

The "winter" of the global PC market has lasted for four years since the growth slowed down and declined in 2012.

However, some industry insiders have also reached a consensus that the PC market will pick up. Wang Jiping, assistant vice president of IDC, said in an interview with the First Financial Daily that the growth curve of the global PC market is expected to bottom out in 2016. "We believe that 2016 will be the year when the global PC market stops falling. The Chinese market will still decline by about 5% in 2016, but it is expected to bottom out in 2017."

Lenovo Group Chairman and CEO Yang Yuanqing also believes that the PC industry, which has been predicted to fail many times, still has a good future, and has seen some good signs in the PC market: Windows 10 has been accepted by more and more companies, and may usher in another wave of corporate machine replacement; in addition, some new product forms, such as pluggable two-in-one tablets (tablets with keyboards) and dual-mode computer products have received more and more attention from consumers, and new forms and new mode products will grow this year.

Huawei released its first PC product, the two-in-one MateBook.

Yu Chengdong said that Huawei believes that rigid demand in the field of mobile office will always exist.

The possibility of successful disruption

Regarding Huawei's opening of new PC business, Yang Yuanqing said in an interview with the media including China Business News at the financial report communication meeting in early February that Lenovo is not particularly concerned about the entry or exit of a certain manufacturer. "Of course, if they come in, there are also good things. It will bring the wind to this industry, which can drive consumers and the market to pay more attention to this industry. This is something we welcome."

Huawei and Lenovo are both companies with glorious histories, both industry leaders, and both iconic Chinese technology companies that have become globalized. However, from the perspective of the current status of the company's consumer business, Huawei, which started with mobile phones and expanded into smart watches and PCs, has achieved very different performance from Lenovo, which started with PCs and expanded into the mobile field.

In 2015, Huawei's smartphone business drove a 30% revenue growth for the entire Huawei Group, while Lenovo's smartphone and PC businesses both saw significant declines. Lenovo's smartphones once surpassed Huawei in the "China Cool Alliance", but now it has been overtaken by the latter. In the PC business, Lenovo is still the "big brother" with the highest global market share, but in the fiscal quarter ending December 31, 2015, it recorded a 12% and 18% decline in revenue and profit.

Will the story of Huawei's overtaking in the smartphone market be repeated in the PC field in the future? "Just as it challenged Ericsson in the telecommunications industry and Cisco in the enterprise network in the past, Huawei may also hope to continue to challenge industry giants through its own technological innovation and wolf culture," Zeng Tao told China Business News.

"The PC is not a dying business, but it is indeed a business that needs more innovation." This is how Intel China General Manager Xia Lebei commented on the PC industry, which is also the consensus of most technology companies. However, in 2016, another key factor for Huawei to "bottom out" the PC market is that the accumulation of industry technological innovation has reached a critical point to promote the recovery of the industry market.

In the second half of 2015, Intel released its latest generation of chip products for mobile office needs, Microsoft's latest generation of Win10 operating system was launched, and new wireless charging technology was being developed. At the same time, the PC products of the previous generation of technology have also reached their limits in terms of service life. Lenovo and Huawei have discovered these characteristics and have decided to focus on PCs, while also being optimistic about the needs of two-in-one devices and mobile office.

From the perspective of PC core technology, both chips and operating systems are not in the hands of current mainstream PC manufacturers, and the newly entered Huawei also uses Intel and Microsoft products. However, judging from Huawei's R&D in telecommunications equipment and smartphones, it does not rule out continuing to use the old path of investing heavily in R&D for a long time and focusing on core technologies to establish core technological competitiveness.

"Based on the way it has successfully challenged giants in the past, Huawei may choose to make breakthroughs in core areas such as operating systems and chips, and introduce Android systems and HiSilicon chips," Zeng Tao said. However, it is not easy for Huawei to challenge Lenovo's position in the PC market or to get a share of the PC market.

IDC's view is that the entire PC market is currently showing a trend of concentrating on the four major PC manufacturers: Lenovo, HP, Dell and Apple. IDC analyst Tom Mainelli pointed out that among the current top 5 to 10 manufacturers, it is very likely that two will exit the market.

In Yang Yuanqing's view, the integration trend in the PC industry is more favorable to Lenovo. He believes that the general trend is not that more and more manufacturers are coming in, but that more and more manufacturers are going out, and Lenovo will use this advantage to expand its market share.

In addition, there have been many failed cases of cross-border disruption in the technology circle in the past few years. Intel, the leader of the PC industry, tried to enter the mobile industry through mobile chips, but failed to shake Qualcomm; ARM and Google also tried to cross-border into the server and PC industries, but their performance is not satisfactory. In the view of some industry experts, it is not easy to enter the "closed" PC circle and break the bottleneck of PC innovation.

"I'm not surprised at all," said telecom expert Fu Liang. "Huawei has already entered the PC field when no one knew about it, but it was originally industrial. Huawei has considerable technical reserves. To maintain the rapid development of its consumer business, Huawei can transfer its accumulated technical means to the PC field. The key is how to make PCs."

"If we aim to compete with Apple MacBook from the beginning and adopt similar products and market strategies, it will certainly be difficult to make a breakthrough. But if we leverage our own advantages from the beginning and make the 2B proportion of our PC business larger than 2C, it may be relatively easy to open up the market locally," said Fu Liang.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.