The future of Lenovo mobile phone: is it a rebirth or destruction

After the acquisition of Motorola Mobility, Lenovo's mobile phone business began a series of executives, brands and channel adjustments. In the context of the entire industry upgrade and fierce reshuffle in 2014, Lenovo mobile phone suddenly went to its development turning point: either reborn, or death.

In the past five years, after the failure of the initial music phone, Lenovo has comprehensively adjusted its product, channel and brand strategy. Subsequently, its mobile phone business began to explode in an all-round way. It is now the second largest mobile phone manufacturer in the domestic market. However, behind the sales growth rate, Lenovo's mobile phone has not been able to make breakthroughs in the middle and high-end market. Over-reliance on the operator market has also caused its mobile phone business to be basically on the edge of profit and loss.

Under pressure, Lenovo mobile phones will make further adjustments this year:

First, the acquisition of Motorola's mobile phone business. On January 30, 2014 (6:00 in the morning of the Lunar New Year), Lenovo announced that it had acquired 2.9 billion yuan for Motorola Mobility and began to enter the developed overseas markets such as the United States, while also harvesting an international mobile phone brand.

Second, the high-level adjustment. In March of this year, the Lenovo smartphone business management team was adjusted. Zhang Hui succeeded Feng Xing as the head of Lenovo's smartphone business. Zhang Hui used to be the head of Lenovo's global consumer notebooks, and later started his business. He then returned to Lenovo and was responsible for the Music Phone business. He later became the CEO of Lenovo Compal.

Third, the channel. Lenovo phones tried to sell their phones through their own PC channels, but the effect was very general. Then Lenovo phones began to be sold mainly through carrier channels. After Zhang Hui’s new job, Lenovo’s mobile phone business has increased its “open business unit” and will expand sales of e-commerce and traditional open markets this year. Reduce reliance on carrier channels.

Fourth, the brand. Lenovo will strengthen its social networking marketing based on hotspots this year and highlight the role of “Le Pink” in brand communication.

However, Lenovo's adjustment to the mobile phone business coincides with the background of the global mobile phone industry upgrade and restructuring in 2014, especially in the Chinese market. This has increased the uncertainty of the Lenovo mobile phone business by a large degree of uncertainty:

First, 3G quickly upgrades to 4G. Relying on the domestic 3G market and the thousands of smart phones in 2011, the Lenovo mobile phone business, which is highly integrated with operators, has also seen explosive growth. However, Lenovo's judgment on the development of 4G mobile phones is still slow. When domestic manufacturers such as Coolpad, ZTE, Huawei, and even OPPO turn to 4G, Lenovo is weak in the low, medium and high markets. We must know that China Mobile is ready to phase out 3G mobile phone subsidies this year, and Lenovo 4G will accelerate.

Second, personnel changes. As the new person in charge of Lenovo's mobile phone business, Zhang Hui's sales and execution capabilities are unquestionable. However, the mobile phone is a completely different product and trading mode from the PC business. This is illustrated by the music phone and the channel before Lenovo. Before the war, the change of the team and the transformation of Lenovo's mobile phone increased the uncertainty.

Third, integration with Motorola's mobile phone business. Lenovo has successfully integrated the IBM PC business. Although it has been approved by Liu Chuanzhi for eight years, it is also a rare success story and experience of domestic technology companies. However, the integration of Motorola's mobile phone business is not expected to be completed until August. At this time, nearly three quarters have passed in 2014, and the promotion of Lenovo's mobile phone business this year has been limited. And in China, because it has basically withdrawn from the Chinese market before, for young consumers, the brand of motorcycle mobile phone is no longer fashionable, and it is no longer “cool”. The dual-brand strategy of Lenovo mobile phone in the domestic market is short-term. It is difficult to achieve significant results. In the international market, Lenovo also needs a lot of effort to integrate the valuable design and R&D team of Moto Mobile, as well as the North American carrier market, which is a huge test for Lenovo.

Fourth, the capital chain is tight. Lenovo’s recent acquisitions have cost more than $5 billion, and Lenovo is still seeking mergers and acquisitions in the domestic market. At present, the cash flow in Lenovo's hands is not sufficient, largely due to bank loans and bond issuance. In the face of “sucking money” and its own mobile phone business with extremely low profit or even loss, Motorola’s mobile phone business, which bears huge losses, will be tested as a “bottomless hole”. Lenovo’s cash flow will be tested and the expansion of mobile phone business will be limited.

2014 is Lenovo's 30 years of entrepreneurship. It has grown from a small workshop to the world's largest PC company. Lenovo's path has been a valuable experience for domestic technology companies. However, from the acquisition of Motorola Mobility by Lenovo, it can be seen that the mobile phone business is Lenovo's future for the electronic consumer market. In the big changes in the industry structure, it has changed dramatically. This is the choice and reality of Lenovo mobile phones. Therefore, for Lenovo, the mobile phone business in 2014 was either born again or died in internal and external troubles.

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