Tapping into India’s growing market for smartphones, Chinese technology major Lenovo plans to strategically align its business with strong focus on research and development (R&D) to ensure growth of its market share, even as smartphone sales decline in its home market.
The company said it earned around $1 billion revenue in India last year and is working to increase that level with double digit growth. It also looking at bringing in more premium devices here, including new Moto Z smartphones, which can be customised with ‘mods’ by Septmeber-October.
‘Mods’ are specialised hardware pieces that snap into place magnetically to give handsets added capabilities. For example, one can use a ‘mod’ for better quality of picture and sound.
Talking to a select media group here, Aymar de Lencquesaing, Co-President — Mobile Business Group (MBG), Lenovo, and Chairman and President, Motorola, said the potential in the Indian market is big as 4G networks are being rolled out by telecom operators and economic growth is robust.
“We will continue to invest in the market and grow our share here, there is a strong long-term potential. We have a share of about 9 per cent and are focused on growing that. Getting to double digits should not be difficult,” he added.
Apart from the device, expected to be priced around of $400, the ‘mods’ may be available for $50 onward. However, Lencquesaing did not comment on the pricing for India, but other officials from the company indicated that such handsets would not be priced less than ₹30,000.
He said the Indian market is also growing in terms of sales of more premium devices, so Lenovo will also ‘accelerate’, as India has a potential $400 billion smartphone market.
Lenovo’s revenues from India grew about 90 per cent last year, but that from China declined 26 per cent year-on-year. Overall, the company’s global revenue grew 68 per cent YoY.
According to research firm Gartner, smartphone sales are expected to slow down this year globally, rising only 7 per cent compared with double digit growth seen in previous years. Lenovo’s Mobile Business Group sales for the quarter ended March 2016 stood at $1.7 billion. It shipped 10.9 million smartphones in the fourth quarter and 66.1 million in the full year.
Motorola contributed nearly five-million units in the quarter to Lenovo’s total, while adding $1 billion to MBG revenues. In 2014, Lenovo had acquired Motorola from Google in a $2.9 billion deal. The company had said it would continue to sell the US brand as a separate label in India, one of its most important markets.
Investment planAsked about investment plans in India, Lencquesaing said the company was studying ramping up the manufacturing capacity from the current six million units.
It has a capacity of manufacturing 10 million units of handsets at its factory Sriperambudur, Tamil Nadu, (contract manufacturing with Flextronics, one of the company's global partners).