Lenovo’s global handset shipments grew +40% annually and delivered record marketshare in Q2 2014. Firmly planted among the top-10 global handset vendors, the Chinese company is poised to enter the top-5 if the Motorola acquisition gets approved by authorities in the second half of the year. However, despite record shipments, growth is slowing for Lenovo, profits remain elusive, and the takeover of loss-making Motorola will make achieving profitability that much harder in the near-term.
The company’s sales volumes are strong in Central and Eastern Europe (CEE) and particularly so in the Middle East and Africa (MEA). Lenovo smartphones were available in 20 markets in CEE and MEA in Q2 2014 and it is entering +20 additional markets in the regions from 2H 2014.
For the present Lenovo is holding off expanding in Western European markets as it waits to complete its acquisition of Motorola. It intends to leverage the Motorola brand, which has strong recognition and 90% consumer brand awareness to target the region.
Lenovo believes that a market shift from premium to mid-tier devices favors its portfolio, and also expects to realize economies of scale as it leverages its supply chain for Motorola handset production. However, profitability will continue to be impacted for at least four to six quarters as it integrates Motorola into business.
This published report, available to clients, includes additional datapoints and analysis of Lenovo’s handset plans.