Lenovo, how much imagination is left outside the PC?

After the first decline in profits in nearly three years, Lenovo chose to turn inward. More than a month after issuing the layoff warning, Lenovo China began a new round of organizational changes. A few days ago, the rescuer mobile phone was exposed to the layoff of the business line because it could not save Lenovo. Due to the weakening demand for personal computers, the spring of the PC market did not arrive as expected. In addition to the two key options, Lenovo wants to open up more growth curves to counter what Liu calls the "worst of times."

A critical year

Lenovo's recent series of actions are triggering associations from the outside world.

On April 6, Liu Jun, Executive Vice President and President of Lenovo China, announced that Lenovo China has launched a new round of organizational changes, officially established seven industry columns, and established a market sales system for large customer groups.

According to reports, the seven columns integrated the sales teams of key account business, ISG China (infrastructure business group) and SSGChina (solution service business group), and reorganized the three echelons of account manager (AR), product and solution expert (SS), and pre-sales technical expert (SE). After the integration, the AR team is subdivided into seven industries: telecommunications, finance, government, manufacturing, education, Internet and key industries.

It is reported that the new fiscal year is the 7th year of Lenovo China's strategic transformation, and it is a key year. This new round of organizational structure changes means that Lenovo China will further increase its investment in enterprise full-stack services and rapidly increase its share of 3S in the market.

In the middle of last year, Liu Jun said that Lenovo China's performance stemmed from two transformations, "customer-centric transformation", which led to the steady growth of PC business performance; The "3S transformation" strategy promotes the rapid growth of new businesses.

This organizational restructuring coincides with two transformations. However, in the eyes of the outside world, whether the "3S transformation" can promote the rapid growth of new businesses is the key to the key year.

At the swearing-in meeting that opened on the same day, Lenovo CEO Yang Yuanqing set a specific performance "FLAG" for the new fiscal year of each business line: according to the latest plan, to increase the proportion of Lenovo's non-PC business revenue by another two percentage points, it means that the revenue growth rate of SSG solution service business and ISG infrastructure business will be further improved.

"The worst of times"

This organizational change comes after Lenovo's 10-quarter consecutive quarter of net profit growth ended. As the leader of the global PC market, Lenovo seems to be unhappy.

According to Lenovo's financial report released on February 17, the group's total revenue and net profit recorded US$15.3 billion and US$437 million, respectively, in the third quarter of fiscal 2023 ended the end of 2022 (the three months ended December 31, 2022), down 24% and 32% year-on-year.

Among Lenovo's three business segments, the Intelligent Devices Business Group (IDG), which accounted for nearly 76% of revenue, experienced significant fluctuations, with revenue falling by 34% year-on-year and operating profit falling by 37%, which was the main drag on the overall performance. Among them, the PC business is undoubtedly the basic plate of the sector and even the entire group, accounting for about 60% of Lenovo's total revenue.

Personal needs have peaked, and nothing has suffered more head-on than the giant companies in the industry, and Lenovo naturally bears the brunt.

From the data point of view, according to IDC statistics, the global shipments of traditional PC equipment in the first quarter of 2022 were 80.5 million units, a year-on-year decrease of 5.1%, and began to show a downward trend, and the year-on-year decline in the second quarter reached 15.3%, and the leading large manufacturers have shown varying degrees of year-on-year decline, and some manufacturers even exceeded 25%. In the fourth quarter, the year-on-year decline reached 28.1%, and the final full-year shipment volume was about 292 million units, down about 16.3% from last year.

In the earnings call, Yang Yuanqing admitted that "the smart device market is now in the worst period." In the industry point of view, Lenovo's transformation is to think of danger in peace, senior industrial economic observer Liang Zhenpeng said that although Lenovo's PC computer business is currently in the forefront of the world, but the decline in the entire PC market shipments, Lenovo Group pressure is not reduced.

For the entire PC industry, in addition to guarding the basic business of the main business and preventing the invasion of "stealing home" by disruptors such as Xiaomi and Huawei, how to seek transformation or diversified development has become a consensus in front of PC manufacturers.

In addition, in response to the decline caused by the cooling of its pillar business, Lenovo has taken measures to reduce staff and costs. Yang Yuanqing said on the conference call that "the company will need to adjust the workforce to cut some of the expenses of the business." But he did not disclose the exact size of the layoffs and the positions.

More importantly, experts pointed out that the "chill" of the PC market will continue in the coming period, in 2019 and 2020, the world is affected by the epidemic, people's demand for home office is high, prompting PC computer sales to soar, but PC computer sales are also affected by the cycle, after the large-scale purchase and replacement tide, the market will inevitably usher in a period of depression, Lenovo as the industry leader, is bound to have a clear observation and understanding of the situation.

Where are the new growth points?

The market is concerned about how Lenovo crosses the industry cycle, and where is the new growth logic? Judging from Yang Yuanqing's speech, in the next step, Lenovo will pay more attention to the field of computing power.

Yang Yuanqing said that now as the artificial intelligence technology represented by ChatGPT continues to be popular, the demand for computing power will also enter a blowout period, and Lenovo's infrastructure solution business is to provide the computing power required for AI applications such as ChatGPT.

Industry observer Hong Shibin pointed out that the domestic demand for computing power is strong and the industry has broad prospects, but in many aspects, the industry still faces problems such as fragmented demand and weak domestic basic software ecology and supporting chips. More importantly, for enterprises, the computing power industry has a higher cost threshold, and for a long time, improving computing power is often regarded as throwing money into "heaping servers", in addition, how to deeply integrate with the real economy and produce a self-driven business closed loop is still a question that needs to be answered. A reporter from Beijing Business Daily interviewed Lenovo Group on related issues, but did not receive a reply as of press time.

Liu Jun said that Lenovo will continue to deepen the 3+3 formation in the future, of which the first 3 are 3 customer business groups of large customers, small and medium-sized enterprises and consumption, and the second 3 is infrastructure, solution services, and development of 3 business groups, which is the end-to-end business responsibility of 3S new business, and undertakes the important task of enhancing the competitiveness of offering and accelerating the growth of 3S business.

Industry views point out that not only Lenovo, including Apple, HP, Dell and other international manufacturers, hope to empower more industries beyond the label of manufacturing, through the accumulated scientific and technological resources, after all, under the wave of digitalization and intelligence, the next hot track is difficult to predict, but for large enterprises, the key is not to run after the wind, but to have a stronger determination and clear cognition, from their own ability to dock with the market.

Beijing Business Daily reporter Tao Feng Wang Zhuli