On April 6, Lenovo Group, a leading enterprise in China's digital economy, held its 2022/23 financial year oath ceremony in Beijing. Yang Yuanqing, chairman and CEO of Lenovo Group, said that in the past year, the global environment has been ups and downs, Lenovo Group has overcome the challenges of the epidemic, parts shortage and geopolitics, and the total turnover in the first three quarters has increased by 22% year-on-year, net profit has risen by 76%, and the annual revenue is expected to cross the 450 billion yuan mark and reach a new milestone. Among them, each business has achieved steady development and breakthroughs:
The solution services business achieved high profit and high growth targets, with revenue growth of nearly 30% and operating margin increasing by 3 percentage points
The infrastructure solutions business turned a profit and grew far beyond the market, achieving double-digit growth above the market for four consecutive quarters and above-market growth for eight consecutive quarters
The revenue and profit of the personal computer business hit a record high; the smartphone business grew profitably for seven consecutive quarters
Edge computing, AR/VR and cloud services based on meta-universe applications in emerging services have moved from incubation to incubation
Lenovo Venture Capital has completed 48 new investments, invested in 15 chip design companies in total, and added three new IPOs
Yang Yuanqing said that in the new fiscal year, the primary issue facing Lenovo Group is how to successfully cross the cycle. Create a new growth engine when the industry is still in the "expansion" stage, and strive to become a new association with stronger innovation ability, higher profit level, greater social value creation, and higher quality development at the beginning of the next cycle.
Erect ladders to cross cycles
Since its inception, Lenovo Group has grown and grown under the cultivation of the state, and its own development is closely linked to social well-being. At present, the technology industry is intertwined in the era of "post-epidemic" and "post-high-speed growth". Lenovo Group has entered a new stage of development and is facing the challenges of a new round of cycles.
The so-called "cycle" refers to a cycle that every enterprise and every industry will go through: expansion, peaking, falling, bottoming out, until expansion begins again. What successful companies have to do is to complete the spiral in cycle after cycle.
The COVID-19 pandemic has changed people's production and lifestyle. The way businesses operate has changed significantly. The process of digital and intelligent transformation in countries around the world is accelerating. This brings opportunities for performance growth to Lenovo Group.
Yang Yuanqing said that in the face of a new round of cycle, Lenovo Group should accurately judge its position in the cycle, through technological innovation and business model upgrades, set up a ladder, and steadily cross the cycle. In order to achieve long-term and precautionary measures, Lenovo Group will build three pillars and strengthen two cornerstones:
Technological innovation is the first pillar
Through technological innovation, Lenovo Group will become one of the leading enterprises in the global ICT industry, become a pioneer and enabler of global intelligent transformation, and is committed to solving the common challenges facing mankind.
"We must aim high, with the courage to break the boat, with the determination to be reborn, with unprecedented strength, so that the main theme of technological innovation, the main theme of the development of association, will be carried forward more," Yang Yuanqing said at the oath-taking conference.
According to the plan, by the end of the 23/24 fiscal year, Lenovo Group's R&D investment will double from the 20/21 fiscal year, and the total R&D investment will exceed 100 billion yuan in the next five years. Focusing on the technical framework of "end-side-cloud-network-intelligence", strengthen basic research and breakthrough technology, focus on the short-term, medium-term and long-term, and invest resources in three tracks:
The next 1-2 years will focus on innovations around existing products, applications and business models, including equipment, key components, applications and the "everything is at service" business model within each business framework.
In the next 2-3 years, we will incubate new services driven by technology; in addition to data intelligence and cloud-network integration services, the innovative achievements in ar/VR technology, edge computing, and cloud service business based on the application of meta-universe have entered the incubation stage.
In the next three years and beyond, we will carry out basic and breakthrough research around core technologies and emerging technologies. Focusing on breakthrough technologies in the ICT field such as next-generation artificial intelligence and next-generation communication protocols, we continue to explore new computing scenarios such as on-board computing and meta-universes and accumulate core technologies; based on the field of large computing, we began to explore basic research on computing power sharing and data circulation, such as privacy computing and multi-heterogeneous advanced technology architecture, focusing on the long term, serving society and serving mankind.
The three tracks have clear responsibilities and resources, fully seize the high-profit and high-growth opportunities in the existing market, and expand to related technical fields and market segments, while creating the core technical advantages of Lenovo Group and establishing a moat.
Dr. Yong Rui, Senior Vice President and Chief Technology Officer of Lenovo Group, summarized Lenovo Group's technological innovation vision and philosophy as "standing on top of the sky, both inside and outside". "Dingtian" is a forward-looking technology for layout, and "Standing" is to empower existing businesses. "Both inside and outside" is to help empower the industry on behalf of Lenovo Group. Focusing on the technological innovation achievements of the new IT architecture of "end-edge-cloud-network-intelligence", we vigorously promote the transformation and development of existing businesses. Lenovo Group has also established a Lenovo Technical Committee, which is responsible for the formulation and implementation of Lenovo Group's overall technology strategy and R&D plan to promote R&D more efficiently.
In terms of innovative talent reserves, on the basis of the recruitment of 5,000 hard-core scientific and technological talents completed in the previous fiscal year, Gao Lan, senior vice president of global human resources of Lenovo Group, revealed that in the new fiscal year, it will continue to recruit about 3,600 R&D talents and increase the number of campus recruits to achieve the goal of adding 12,000 R&D personnel in 3 years.
Service-oriented transformation is the mainstay
Another growth engine to build through the cycle is business model upgrades, i.e., service-oriented transformations. By 2025, the global IT services market will exceed $1 trillion. Achieving a service-oriented transformation will enable Lenovo to complete the upgrade from a hardware product manufacturer to a high-tech-driven solution provider. Lenovo Group will enter a new stage of growth driven by operations.
In the last fiscal year, the newly formed SSG Solution Services business group launched the TruScale "Everything is a Service" brand. On this basis, Lenovo Group has further rationalized its organizational structure in accordance with the three types of services of support services, operation and maintenance services, project services and solutions, clarified the leadership responsibilities, and integrated sales resources in accordance with the two lines of China and the world, so as to better achieve economies of scale.
Support Services will continue to increase device service penetration and expand higher rates of premium services.
O&M services, including "everything as a service," will scale up and maintain high profit margins.
Project services and solutions will create system integration capabilities, accumulate knowledge, experience and capabilities in vertical industries, and launch more reusable solutions with their own intellectual property rights.
Yang Yuanqing said that although the transformation is led by SSG, it is the task of the whole Lenovo Group, and the service should become the stepping stone and customer-centric touchstone of the company's overall sales.
Luca Rossi, senior vice president of Lenovo Group and president of IDG, said: In the new fiscal year, Lenovo Group should consolidate its undisputed position in the global computer market and maintain an industry-leading profitability level. In the mobile business, it will continue to defend its strong position in Latin America and accelerate its growth in North America, while entering new markets in EMEA and Asia Pacific. It is necessary to seize new opportunities including AR/VR, artificial intelligence, smart home and smart collaboration, and further activate and enhance the Lenovo and Motorola brands.
Kirk Skaugen, executive vice president of Lenovo Group and president of ISG, said: "By 2025, the market for ICT infrastructure will reach 250 billion US dollars, which means that Lenovo Group has unlimited opportunities. In the new fiscal year, ISG will focus on innovation to promote high-speed growth and sustainable profitability, continue to promote the 3S strategy, pay more attention to as-a-Service (everything is service) and Lenovo TrueScale; further accelerate the ODM+ model; and develop a more diversified customer base, while achieving sustainable profitable growth, focus on promoting environmental sustainability, and help deliver on Lenovo Group's global ESG commitments.
Ken Wong, senior vice president of Lenovo Group and president of SSG, said: "Looking around the world, all walks of life are accelerating digital and intelligent transformation. Service-oriented transformation is Lenovo's current top priority, and SSGs are the glue that connects lenovo's entire portfolio. In the new fiscal year, SSG will take full advantage of "endogenous externalization" to continue to innovate, continue to expand TruScale's "everything is at service", further strengthen partnerships in the ecosystem, and make greater contributions to the profitable growth of Lenovo Group.
Liu Jun, Executive Vice President of Lenovo Group and President of China, said: Lenovo China will uphold the vision of "Lenovo Smart China, Technology Empowers China's Intelligent Transformation", and in the new fiscal year, Lenovo China will implement the Dragon and Tiger Plan 2022. Dragon Plan 2022 will open the 3.0 stage of "customer-centric" transformation, focusing on the customer's 3S needs, through intelligent means such as Martech and Sales Tech, accompanying customers throughout the life cycle to grow, and becoming a new IT partner and smart life partner of customers. The Tiger Plan 2022 will focus on driving 3S development through innovation. Lenovo China's goal in the new fiscal year is to achieve rapid growth of 3S business on the basis of the steady growth of PC market share, accounting for more than 30%.
Social value is the backbone of the finale
Lenovo Group starts from the four aspects of serving the country, industry, people's livelihood and environment, empowers with scientific and technological innovation, and contributes to society.
Yang Yuanqing said that as a practitioner of "taking the domestic cycle as the main body and promoting each other with the domestic and international dual cycles", Lenovo Group should be a pacesetter of the "double cycle". Increase investment in domestic science and technology, use higher quality technology, products and services to stimulate and meet new demand on the demand side, and inject impetus into expanding domestic demand; on the other hand, continue to deeply participate in the international cycle, do a good job as a hub for domestic and international circulation, push more and better Products and programs "created" by China and "intelligent manufacturing" into the international market, and bring China's industrial chain supply chain advantages to the world on the basis of taking root in the domestic cycle.
Lenovo Group is committed to becoming a high-quality development cadre, while its own intelligent transformation, make full use of transformation experience, empower the digital and intelligent transformation and upgrading of all walks of life, and promote the domestic industry, especially the manufacturing industry, to move towards the middle and high end of the international industrial chain. At the same time, in addition to improving quality and efficiency, we will adhere to green development and achieve net zero emissions by the end of 2050. Lenovo Group Tianjin Smart Innovation Service Industrial Park is stepping up construction in accordance with the goal of "zero carbon factory", and through green manufacturing and green supply chain system, guide and drive the upstream and downstream of the entire industrial chain to jointly achieve low-carbon transformation.
At the same time, Lenovo Group has taken practical actions to help common prosperity, not only supporting the high-quality employment of all kinds of talents, but also committed to supporting the development of small and medium-sized enterprises, driving a large number of small and medium-sized suppliers, distributors and invested enterprises to grow together. Lenovo Group's more than 200 suppliers and 60,000 channel partners are small and medium-sized enterprises. More than half of these channel partners have infiltrated areas below the county level, contributing to rural revitalization throughout the country.
Among the enterprises invested by Lenovo Venture Capital, the specialization is the most important component, and 39 of the invested enterprises have been rated as national, provincial and municipal specialized special new enterprises, covering ten fields such as core components, ARVR, robotics, and industrial software. He Zhiqiang, senior vice president of Lenovo Group and president of Lenovo Venture Capital Group, said: When investing in these enterprises, they are not "outlets", and face problems and challenges, after identifying the core values of these enterprises, Lenovo Venture Capital actively does "charcoal in the snow" type of investment, and jointly solve problems into the next stage of rapid development.
"One Association" and digitalization
Two cornerstones provide a solid base
The three pillars are the main backbone of Lenovo Group through the cycle and steady and far-reaching, and the two cornerstones of "the same Association" and digitalization will lay a new foundation for Lenovo Group's development.
"One Lenovo" enables Lenovo Group to have a "pocket to cloud" product portfolio, which can achieve large-scale and efficient collaboration, so that global resources can be delivered locally, and at the same time, the united corporate culture runs throughout, making Lenovo Group have obvious differentiated competitive advantages.
The cornerstone of digitalization will run through the entire value chain of "R&D, production, supply and marketing services", support the transformation of Lenovo Group from equipment suppliers to service and solution providers, and achieve "endogenous externalization" and external empowerment.
Contribute to social prosperity and people's happiness
Looking forward to the new fiscal year, Yang Yuanqing said: Lenovo Group will enter a new stage. Not only to achieve the improvement of performance, but also to promote basic, breakthrough scientific and technological innovation; not only to provide high-quality products, but also to become a high-tech-driven solution enterprises; focus on their own development at the same time, but also to the country, society, to mankind to make more contributions.
In the new fiscal year, new journey, new cycle and new starting point, Lenovo Group will uphold the attitude of humility, openness, inclusiveness and win-win, listen carefully to the voice of customers, work together with partners for win-win results, form a smooth communication mechanism with all sectors of society, and jointly build a future driven by scientific and technological innovation, continuous service to customers and create more social value under the new development pattern.
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