Analysis of Lenovo's internationalization path: buy, buy, buy

Lenovo Group, led by Yang Yuanqing, has entered the global IT market since it acquired Motorola and IBM x86 servers in 2004. After ten years of hard work, its every move now has to be interpreted from an international perspective.

On October 30, the last two days of October, Lenovo Group announced that it had officially completed the acquisition of Motorola Mobility from Google. Through this acquisition, Lenovo Group immediately became the world's third largest smartphone manufacturer.

It is reported that Lenovo will operate the newly joined Motorola as a wholly-owned subsidiary, and its headquarters will continue to be located in Chicago, U.S. After the acquisition is completed, nearly 3,500 employees from around the world will join Lenovo, including about 2,800 employees in the United States, who will be responsible for designing, planning, selling and supporting Motorola's excellent products.

Motorola Mobility will be led by Lenovo's young executive, Liu Jun, executive vice president and president of the Mobile Business Group, who will serve as chairman of Motorola Mobility's management committee. Rick Osterloh, a senior Motorola executive, will continue to serve as Motorola's president and chief operating officer.

The industry generally believes that Lenovo's move is a pass for Lenovo mobile phones to enter other markets such as Latin America.

"From now on, we will have a rich patent portfolio and intellectual property licenses, which will enable us to conduct business in all markets around the world, especially mature markets." Yang Yuanqing, head of Lenovo Group, chairman and CEO, also said the same on the 30th.

Although the number of patents Lenovo obtained from Motorola in this acquisition was not as many as that of Google, it still obtained more than 2,000 patent assets, a large number of patent cross-licensing agreements, and the Motorola Mobility brand and trademark portfolio.

What do we think about this matter?

As we all know, China has always been considered Lenovo's base camp. However, the author believes that with Lenovo's current "size", Yang Yuanqing's mergers and acquisitions are all closely related to the global market, and it is even an "international chess game".

Lenovo Group's second quarter and interim financial reports for the 2014-2015 fiscal year released on November 6 showed that for the second quarter of the 2014-2015 fiscal year ending September 30, 2014, revenue was US$10.475 billion, a year-on-year increase of 7% from US$9.774 billion in the same period last year; net profit was US$262 million, a year-on-year increase of 19% from US$220 million in the same period last year.

In the six months ending September 30, 2014, Lenovo's revenue in China was US$7.546 billion, accounting for 36% of the group's total revenue; revenue in the Americas was US$4.386 billion, accounting for 21% of the group's total revenue; revenue in the Asia-Pacific region was US$3.138 billion, accounting for 15% of the group's total revenue; revenue in the Europe/Middle East/Africa region was US$5.8 billion, a year-on-year increase of 41%, accounting for 28% of the group's total revenue.

Obviously, Lenovo's revenue outside of China has accounted for a considerable share, totaling more than 50%.

Looking at Lenovo's current business structure, it has everything from personal PCs, servers, smart phones, tablets, smart TVs, etc.

For so many complex hardware terminals, Yang Yuanqing now proposes a "three-advantage superposition" strategy. The first plus sign is: personal computer + mobile device, collectively referred to as smart terminal devices; the second plus sign: smart terminal devices + background basic equipment; the third plus sign: equipment + cloud services.

The first plus sign is the easiest to understand. Personal computers are Lenovo's original products, and Lenovo has put in the most effort. It has experienced many setbacks and setbacks. It started in China and eventually reached the top of the world, becoming the world's largest PC company. Mobile devices are products that Lenovo has been focusing on in recent years. Whether you admit it or not, think about Yang Yuanqing's bet on smartphones. This move seems to be a good strategic vision. In the context of the PC's decline, it is indeed commendable that he can make timely strategic adjustments.

The second plus sign is the server. At the beginning of the year, Lenovo suddenly made a move to acquire IBM's x86 server business for about US$2.3 billion, which is undoubtedly a boost to the development of its server business. With the IBM server brand, Lenovo's strength in this area has been greatly enhanced. This acquisition was also announced to be completed at the end of September and the beginning of October this year.

The third plus sign mainly refers to software, such as Le Store. Lenovo said that the latest data of its Le Store is nearly 9 billion downloads, with more than 27 million software downloads per day.

A study of Lenovo Group's current development path shows that it mainly focuses on a certain industry and then gradually expands it, while mergers and acquisitions are a means of rapid development.

Although personal computers are not popular products now, Lenovo's development path in this area is worth studying. Lenovo started with this and has been working hard for many years. After becoming the largest PC company in China, Lenovo took over IBM's global personal PC business in 2004 and began its internationalization journey, competing with HP, Dell, and Acer in the international market.

In January 2011, Lenovo established a joint venture with NEC and became the PC leader in Japan, one of the important Asian markets. At that time, statistics showed that the joint venture established by the two parties accounted for 26% of the Japanese personal PC market. According to statistics from IDC, in the fourth quarter of 2010, Lenovo Group's PC market share reached 10.4%, ranking fourth after HP's 19.5%, Dell's 12.1%, and Acer's 10.6%. If NEC's market share is included, Lenovo is expected to enter the top three in the world again and narrow the gap in market share with Dell to less than 1%. Morgan Stanley's analysis at the time pointed out that if Lenovo Group acquired a controlling stake in NEC's PC business, it could increase its computer shipments by 6%-8%, sales by 10%-12%, and narrow the market share gap with Dell and Acer, the second and third market leaders in the world.

In June 2011, Lenovo acquired the German electronics manufacturer Medion AG. After completion, the agreement will double Lenovo's market share in Germany and make it the third largest manufacturer in Europe's largest personal computer market. Lenovo Group said at the time that the two parties will have more than 14% of the German personal computer market and about 7.5% of the Western European personal computer market.

In September 2012, Lenovo acquired Brazil's CCE company. In this market, which is known as the world's third largest PC market, its market share quickly doubled to 13%, making it the country's third largest PC manufacturer.

In the second quarter of 2013, 30 years after its establishment, Lenovo finally received joint recognition from two world-renowned research organizations, IDC and Gartner: it surpassed HP with a market share of 16.7%, successfully ascended to the top and dominated the global PC industry.

This is Lenovo's PC development path. However, the global PC industry has ceased to be a high-growth industry in recent years, and even the growth of the entire industry has begun to decline for many years. However, Yang Yuanqing has long been aware of this. Therefore, while working hard on the PC dream, Yang Yuanqing began to focus on the mobile phone business as early as 2009. The landmark event was the repurchase of Lenovo Mobile's equity from some investors led by Hony Capital in November 2009. Yang Yuanqing said at the time, "While Lenovo's global PC business continues to develop steadily, we regard mobile Internet as an important strategic direction for the future." Then Yang Yuanqing began to gradually increase his efforts on smartphones. In April 2010, the smartphone Lephone was launched. In 2011, the Mobile Internet and Digital Home Business Group (MIDH) was established, focusing on the research and development of smartphones, tablets, smart TVs and other terminals. Everyone knows the story behind Lenovo's development of smart terminals. There are more and more product types of smart terminals. Liu Jun's leading MIDH has made Lenovo's smartphones rise rapidly with the strategy of sea of ​​machines.

At the same time, Lenovo has shifted its focus from competing with HP and Dell in PCs to Apple and Samsung in smart terminals. By acquiring Motorola Mobility, Lenovo has set its sights on the international smart terminal market. "From now on, Lenovo and Motorola brands will be spread across North America, Latin America, the Middle East, Africa, Asia, and our home base in China. We will be a formidable competitor in every market." Yang Yuanqing's statement revealed Lenovo's "ambition". "In the mobile field, we set a goal at the beginning of the year to achieve sales of 100 million smartphones and tablets this fiscal year. This goal has not changed and we are very confident that we can achieve it."

And if Lenovo follows the development trajectory of personal PCs, the smartphone industry may one day allow Lenovo to surpass Apple and Samsung. Of course, it seems difficult now, but who can guarantee that this will not happen?

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.