In 1994, the domestic computer industry was in the midst of a bitter winter, and international computer brands hit the market violently. However, under the influence of macro-control, the purchasing power of domestic institutions and institutions did not improve.

At that time, almost all the well-known computer companies in Zhongguancun gave up the most difficult independent innovation brand management, and chose to be the agent of multinational brands. Great Wall was IBM, Founder was DEC, and Stone was Compaq. Shi Yuzhu announced his entry into health care products.

At this time, a special company – Lenovo. It is facing a difficult choice, and two souls, Liu Chuanzhi and Ni Guangnan, have a fatal disagreement.

Lenovo’s team came from the “Chinese Academy of Sciences”. It has just completed the share restructuring and successfully listed on the Hong Kong Stock Exchange. It was when Liu Chuanzhi proposed the “market school”, that is, the “trade, industry and technology” led by market demand. “Route, and Ni Guangnan’s idea is to win with technology accumulation, to enter the chip, and take the “technology, industry and trade” route.

We all know what happened later. In Lenovo’s history, this year is defined as a “turning year”, and a thought-provoking fact is that in the mid and late 1990s, almost all well-known enterprises chose Liu ‘s road.

In the years that followed, Yang Yuanqing, Guo Wei, Zhu Linan, Chen Guodong, Zhao Linghuan, and Sun Hongbin, who were once regarded as “successors of the godfather”, all started from market sales.

Lenovo’s destiny and temperament were deeply influenced and bound from that moment.

Born on PC, Stuck on PC

Lenovo’s decision was right.

Lenovo has become a veritable “PC brother”. According to data released by IDC in October this year, Lenovo’s PC shipments and market share ranked first in the world.

In fact, the competition in the PC market has always been fierce, and Lenovo really opened the gap with other competitors in 2005.

This year, Lenovo acquired IBM’s entire PC business for $1.75 billion, making it the world’s third-largest PC maker.

During the same period, the mobile phone market actually emerged as a leader, Motorola. At that time, Lenovo was also making mobile phones, but it suffered from a lack of core technology. In order to “break through” on the mobile phone track, Lenovo acquired Motorola for $2.9 billion the following year.

Unfortunately, both Motorola and Lenovo’s own mobile phones failed to stand out in the mobile market and gradually fell behind other brands.

With the gradual saturation of the global PC market, Lenovo, which has reached the ceiling of the PC industry, has to start deploying new businesses.

In 2016, Lenovo officially established a data center business group, hoping to capture the data center market with new businesses such as cloud services and enterprise IT infrastructure.

Mantis Finance saw that in Lenovo’s latest financial report for the second quarter of the 2020-2021 fiscal year, Lenovo’s total revenue in the quarter reached 14.5 billion US dollars, of which the smart device business group’s revenue was 13 billion US dollars, accounting for 20% of the total revenue. 90%, while the data center business group’s revenue is $1.5 billion, accounting for only 10% of the total revenue, far less than the former.

Overall, Lenovo is still relying on the PC business to “strengthen alone”. At present, there are more and more entrants in the PC battlefield, and other businesses other than PC have not achieved obvious results. Obviously, the best era of Lenovo has passed.

Struggling to move forward: once again, again and again, and three times exhausted

In 2004, after Lenovo acquired IBM’s PC business and its ThinkPad brand, it successfully ranked among the top three computer manufacturers in the world. However, although Lenovo has maintained its dominant position in this market, with the increasing saturation of the global PC market, the growth rate has actually slowed down year by year, far less than before.

Although the outside world has always “bad-mouthed” Lenovo’s development in recent years, in fact, Lenovo has never stopped “tossing”.

1) Enter the mobile market

In fact, Lenovo has been eyeing the mobile market very early.

In February 2002, Lenovo Group purchased 60% of the shares of Xiamen China’s mobile phone business for 90 million yuan, obtained the qualification for mobile equipment production, and officially entered the mobile market.

In the era of feature phones before the birth of Iphone, Lenovo’s mobile phones actually sold well. According to data from Analysys International, Lenovo’s mobile phone market share even ranked fourth in the country in the fourth quarter of 2007.

The Iphone, which debuted in 2007, really gave a big impact to the domestic mobile phone market, but Lenovo responded quickly and released a smartphone called “Le Phone” in early 2010, which caused quite a stir in the mobile phone market.

Just when the limelight was in full swing, Lenovo made a strategic challenge in the mobile phone business and implemented the “machine sea tactics”. As a result, Lenovo, which originally released one product a year, has become able to release more than 40 new products a year.

The strategy really worked. In just one year, Lenovo’s mobile phone shipments in the domestic market soared by 536.4%. But at that time, Lenovo did not realize that this was actually a bubble growth. “Seeking quantity, not quality” laid the groundwork for Lenovo’s difficulty in forming a brand advantage in the later stage of mobile phones.

With the launch of Xiaomi’s “Red Rice Series” and Huawei’s “Honor Series”, Lenovo’s mobile phones lacking core technologies are becoming less and less competitive, and it is difficult to win the “heart” of consumers.

In order to reverse the situation, in 2014, Lenovo acquired Motorola from Google Singer for 2.9 billion yuan. What I didn’t expect was “cheap is not easy to take”.

When Google spent $12.5 billion to acquire Motorola, it took over 170,000 of its technology patents. Although Lenovo only used 2.9 billion US dollars to take Motorola into the bag, but all of Motorola’s 15,000 important technical patents were “swallowed” by Google, leaving only 2,000 for Lenovo.

Motorola, which has lost its technological advantage, naturally cannot continue to “charge” for Lenovo in the mobile phone battlefield.

At present, when Apple’s “extreme experience” and Xiaomi’s “king of price-performance ratio” have become the consensus of the entire mobile phone market, it is difficult for Lenovo’s mobile business to re-establish its own advantages.

2) Layout data center business

The data center business launched in 2016 is undoubtedly another new attempt by Lenovo.

On June 9, 2016, Lenovo officially established a data center business group, which includes ThinkServer, System X, storage and other product lines. Overall, Lenovo’s data center business mainly focuses on providing servers to enterprises.

Lenovo is one of the earliest manufacturers of R&D servers in China. In 1995, Lenovo launched the “Wanquan 486/66”, which officially entered the server market.

Since then, Lenovo has continued to update the Wanquan series, Wanquan II5/133, Wanquan 2200, and Wanquan 4500, which have appeared on the international stage, have come out one after another, making Wanquan one of the most influential domestic brands in the Chinese server market.

From 2012 to 2016, Lenovo’s server business entered a period of rapid development. This is evident from Lenovo’s series of actions in recent years:

In June 2012, Lenovo officially upgraded the server brand from the previous “Wanquan” to “ThinkServer”;

In early 2014, Lenovo acquired IBM’s low-end server System x business unit;

In 2016, the Lenovo Data Center Business Group was officially established, and the server business became a key segment of the group.

It can be seen that Lenovo has high hopes for this new business. So, how does it perform?

At present, the entire data center business group is still in a state of loss, and according to the latest financial report for the second quarter of the 2020-2021 fiscal year, compared with the same period of the previous fiscal year, the group’s revenue growth rate was only 11%. It can be said that the performance was mediocre and did not “enhance” Lenovo’s overall business.

What’s more worth mentioning is that in the server field, Lenovo has to face strong competitors such as Dell and Inspur. Therefore, it is still difficult to say whether Lenovo can really rely on servers to “promote” the entire data center business group.

3) Impact edge calculation

In the past two years, Lenovo has been eyeing a new field – edge computing.

In August 2019, Lenovo’s data center business group launched the ThinkSystem edge server tailored for edge computing and AI.

In 2020, the Lenovo Innovation and Technology Conference showcased the latest application of intelligent edge computing in the industry – Lenovo Morningstar Robot, which replaces manual operations in environments such as assembly lines, limited workspace, danger, and radiation, empowering intelligent manufacturing.

But there are not a few companies eyeing the “edge computing” cake. In addition to Lenovo ThinkSystem, Amazon AWS, Microsoft Azure IOT edge, and Alibaba Cloud link edge are all born for edge computing.

At the same time, the well-known chip manufacturer ARM and Intel, which is also a hardware manufacturer with Lenovo, have also launched a strong impact on edge computing.

In this way, although Lenovo has established a certain foundation in the data business sector, in the face of strong competitors such as Microsoft, Intel and ARM, Lenovo may not be able to gain an advantage.

What’s more, in order for edge computing to really work for enterprises, there are still the most critical application scenarios development and landing issues that need to be solved, which are all new challenges for Lenovo.

Mantis Finance saw that after several struggles, Lenovo did not gain advantages in new areas other than the PC business, but entered a new period of chaos.

The road to transformation is difficult, can Lenovo still Lenovo other than PC?

Lenovo’s current status quo, it is easy to think of the mobile phone giant – Nokia.

Nokia was once the largest listed company in Europe, with a stock market value of over 200 billion euros.

In 2007, Apple launched the first iPhone, ushering in a new era of smartphones. At this time, Nokia, complacent with its past achievements, did not realize the crisis, and was still committed to expanding the market, ignoring the research and development of its own products.

Ultimately, Nokia sold its core mobile phone business for $7.2 billion in 2013.

Although Lenovo’s PC business will not face the same dilemma as Nokia’s mobile phone in the short term, as Ni Guangnan worries, Lenovo, which lacks core R&D advantages, will find it difficult to maintain its competitiveness in the future.

In other words, once there is a “dark horse” that masters core technologies in the industry, Lenovo will quickly lose its competitiveness in the industry, or even be overtaken, just like Nokia.

We have to start thinking again, as a mature enough old company, why is it difficult for Lenovo to complete the transformation?

Regarding this issue, Chen Huixiang, a former senior manager of Lenovo, believes that part of the difficulty in the transformation of Lenovo Group is due to corporate culture. He said that after 1997, Lenovo, which lived in the praises, began to weaken as the company’s hard power expanded and its team prospered, but the precious cultures of entrepreneurship, innovation and hard work began to weaken. This is not conducive to Lenovo’s transformation.

In fact, in the mid-to-late 1990s, these Chinese enterprises that chose the Liu-style road were generally faced with the dilemma of difficult and slow transformation due to the existence of large-scale businesses such as PCs. In the fast-growing technology industry, it is difficult for them to compete with light Internet companies such as Ali and ByteDance.

In addition, another key reason for Lenovo’s difficulty in transformation is that there is no similar successful experience like Microsoft in China to learn from.

Microsoft, which started with Windows, also encountered a “trough period” when the mobile Internet era came. In 2014, Microsoft’s new CEO Satya Nadella took office. From opening the Windows ecosystem to giving up the impact on the smartphone market, to taking the cloud business as Microsoft’s next core growth engine, Nadella made a series of changes.

It turns out that Nadella is a wise leader. Since 2014, Microsoft has swept away the decline, and its stock price has risen year by year. In 2019, Microsoft’s total market value exceeded one trillion US dollars.

But the success of Microsoft’s transformation does not mean that Lenovo can also. There are certain differences between the two in terms of market environment, internal structure, target strategy, etc., and copying them will definitely not work. Lenovo’s transformation path has to come out of Lenovo itself.

In a word, we cannot deny that Lenovo has indeed made unrivaled achievements in the PC field, but the problems of slow growth of new business and difficult transformation of new businesses in front of us cannot be ignored.

Until these problems are completely solved, Lenovo outside the PC will be difficult to associate with.