Most people have never actually held a Lenovo smartphone, so hearing that they are planning on producing 100 Million smartphones in 2015 might seems a little ambitious. Lenovo has a few tricks up its sleeve for 2015, the Motorola acquisition will be complete (global distribution channels being key) and their band spanking new factory in Wuhan is already in play. Nicole Scott took a trip to both Beijing headquarters and Wuhan factory, to give us a behind the scenes look at one of China’s most ambitious companies.
Lenovo has been aggressively moving in to the market for the past few years. About 5 years ago, they kicked off the “Protect & Attack Strategy” to which they attribute their 2013 third quarter revenue, which for the first time topped $10 billion. Five years a later, they have embraced a forward thinking strategy, as the worlds number one PC manufacturer, they have had to figure out how to move forward while embracing their core demographic. During an interview at the Wuhan factory tour, CEO Yang Yuanqing, or YY, spoke about the company’s vision of computing. “We don’t think there’s a post-PC era—we see a PC-plus era. We know that the PC is no longer the only Internet-access device, but it’s still critical.”
The Wuhan factory was opened in December of 2013, is 200,000 square meters and currently has 3,000 employees manufacturing 30M devices. When the plant hits 100M devices 8,000 people will be employed. The average worker makes $300 a month with dormitory accommodation across the street. Before this plant opened, Lenovo manufactured their devices in Xiamen, Fujian Province, but with Lenovo’s success it could not longer meet demand.
Last year Lenovo sold around 50 million units in 2013. To give you some perspective, Samsung sold 314 million and Apple 153.5 million. However, Lenovo’s numbers are more impressive than they first appear since they have no presence in North America, Western Europe and most parts of the Middle East and Africa. This speaks to their strength in emerging markets where they started selling its smartphones in 2010.
They’ve proven they can make in-roads in markets that have huge growth potential, where pieces of the pie were up for grabs because there was just so much pie to go around. But what about in established markets? If Lenovo is serious about being number 1 in all product categories they’re going to have to go head to head with Samsung and Apple, markets where billions have been spent on advertising and … let’s just say it… customer brainwashing. (I’m looking at you California Apple Fanboys)
Going from Zero to Hero in Western Markets
Once the deal closes on Lenovo’s acquisition of Motorola, they will have access not only to the U.S smartphone market, but to Motorola’s global distribution network. When asked about reopening some of Motorola’s service centers and store fronts in the Middle East, YY stated that they believed that Google had made some mistakes with Motorola and they were looking at restoring its presence.
Lenovo is planning on keeping the Motorola brand, but it wasn’t made clear how the product lines would differentiate, since Motorla has made a name for itself making some of the best value phones on the market, the same space Lenovo occupies with their existing line. Having said that, this doesn’t stop them from doubling up on the mid range smartphone segment while offering a product portfolio for all price segments.
Leaving Motorola’s product line alone, Motorola’s real value to Lenovo comes from their existing carrier relationship and global smartphone distribution network. Last year ASUS made one of the best smartphones on the market but no one ever got to use it because they didn’t have carrier relationships. This year they have gotten the Padfone X into the US, but they did it at cost to the product itself. ASUS made a product to hit price points and sales targets for carriers, thus they didn’t get to release the smartphone they were capable of making. Motorola has fought the hard fight with carriers for decades, it’s not to say that they won’t have to make compromises (these are Telcos we’re talking about after all) but they won’t have to start from scratch like ASUS did (3 years working with AT&T before they got a simple product on the shelf).
Lenovo is currently number three in smart connected devices, number two in the PC and tablet market, but if you look at their PC sales in isolation, they are actually number one. What this means in there is one Lenovo device sold somewhere around the world every 4 seconds.
How a Smartphone is Made
While at the Wuhan factory we also got to check out their production floor where they make the motherboards for the their tablets and smartphones, as well as the general assembly line.
We have a video showing off the Lenovo Beijing Headquarters, the trip to Wuhan on the high speed train and we get to find out how a smartphone is made.
The Wuhan factory has fifteen lines of SMT (surface mount technology) assembly which create the motherboards for the company’s smartphones and tablets. The entire process of making a smartphone or tablet, from scanning in the motherboard PCB, to getting it tested and placed inside its box, takes around 45 minutes.
Surprisingly it’s making the motherboard and the first testing stage that takes takes the longest at 35 minutes. This first step of making the motherboard involves nine workers; five to man the machines, placing the chips on the board and four to test the board and assure quality.
The assembly process which took place on the floor above (which we couldn’t video) takes between 7 to 10 minutes to assemble, test and package but involves 28 workers. For example we saw someone plug in headphones into each handset to makes sure that the jack was working properly. Before the device makes it into the box it goes through a total of 50 tests.
Lenovo Beijing Head Quarters – The Creative Hub Ensuring Innovation
I also visited the Beijing Head Quarters on my trip to China, and got to peak behind the curtain and learn about the design process and how Lenovo keeps churning out innovative products.
Lenovo has a global design team that hails from all part of the world, so it was a particular treat when in the design lab the pitch slide for the original Yoga was shown.
Lenovo has set up technologies in four major fields to bolster the entire Lenovo business innovation endeavor. These include parts for technology and system innovation, natural interaction technology, cloud services and big data technology plus and new materials and design innovation. These make up Lenovo’s core R&D innovation strategy, dubbed “one cloud and multiple screens”, and they are also the source of Lenovo’s business innovation.
I am a fangirl of a lot of different products, and after this trip to China it’s easy to see why I became a Lenovo Fangirl. I loved Yoga from day 1, I’ve owned the Yoga 13 and now the Yoga 2 Pro is my weapon of choice. My kitchen PC is the Yoga Tablet 10 (even though the 8 is way better…I like the bigger screen when I’m using cooking apps). So, as an avid user of their products, meeting with YY & Liu Jun head of Mobile I’m left with no other take a way then..Lenovo isn’t coming, they are already here. The only thing that is going to change is their market share and with their track record of meeting benchmarks and goal posts, their threats aren’t idol.
Disclaimer: Lenovo sponsored my travel to China to visit their facilities. All thoughts are my own.