Interview: Lenovo's chairman on future growth, SMB plans

It's been one year since Lenovo Group Ltd. announced plans to acquire IBM Corp.'s PC division and the enlarged company is now looking to aggressively expand its share of the worldwide PC market. As part of this effort, Lenovo is gearing up to introduce its own brand of PCs to the U.S. and European markets, most likely starting with a line of desktops for small and medium-sized business (SMB) customers.

Lenovo Chairman Yang Yuanqing sat down with IDG News Service on Wednesday at the company's research & development (R&D) center in Beijing to talk about the company's future plans. What follows is an edited transcript of that interview.

IDG News Service: Will most of your future growth come from emerging markets, like China and India?

Yang Yuanqing: Emerging markets will be a major growth area but we think in other markets, mature markets, we also have a very good opportunity. I think our first priority should be the SMB market. You know, IBM's strategy was to only focus on large enterprises. Even for their PC business, their major target was large enterprises, the so-called relationship customers. In our current portfolio of sales outside China, 75 percent of our sales are to those large enterprises, only 25 percent is to SMB. There are almost no consumer sales at all.

IDGNS: How does that compare to sales in China?

Yang: In China, 75 percent of our customers are transaction customers, that includes SMBs and consumers. It's the reverse. That's not only our situation, that's the market situation worldwide. I believe that worldwide at least 60 percent of sales are to transactional customers: consumers represent 30 to 40 percent and SMBs are another 30 to 40 percent. It's very clear that is our opportunity. Outside China, only 25 percent of our sales are to SMBs so we should have a very good opportunity to improve that. That's our key to growth.

IDGNS: Will you have to win these SMB customers away from your competitors?

Yang: We can be strong in the SMB segment, so any company who has SMB customers should be careful. We will get market share from those guys.

IDGNS: When will customers in the U.S. and Europe get to buy Lenovo-branded products?

Yang: Early next year.

IDGNS: What kind of products will you offer?

Yang: In China, we have a full range of PC products, from low-end commercial PCs for SMBs to high-end consumer PCs. We also have some products that go beyond the PC, such as handsets and printers.

IDGNS: Are you planning to sell all of these products, including mobile phones, outside China?

Yang: Certainly, yes. We have a step-by-step strategy to take these products outside China to the worldwide market. Our first step will be to offer SMB products. We will focus on the desktop side because we have much stronger, much better desktop products in China. The next step will be to offer consumer products and the third step will be other products beyond the PC.

I think it's a very clear, very good policy to adopt this step-by-step strategy. Early next year, we will offer mainstream SMB products and then during the latter half of the year, we will offer consumer desktops and consumer PCs. The year after next it might be other products.