Devott Insights: The Real Problem of Lenovo Phone May not be itself
Source: View: 295 Date: 2015-06-17

The storm of “changing leader” for Lenovo mobile terminal business has suddenly appeared, and also brings a great disturbance in whole industry. This can make people into deep thought. Mobile internet is the necessary trend for science & technology industry and technology flow. There are some main performances: one is the extension of mobile internet; the second is upgrading of mobile internet devices as extensive framework. Objectively speaking, as the benchmark enterprise in China’s science & technology industry, Lenovo shows a feeling of “Although in the busy street, it also keeps silence” that further away from two storm eye. The reason of objectively speaking is to deny that Lenovo ignore these. The real problem is compared with competitors Lenovo not only takes slow actions but also makes more mirrors.

The frog suppress dead in warm water are always more than dead in boiling water. The sudden decision on human resource of mobile department from Lenovo decision leadership made people confusing who still immersed in excitement of new product. This urgent sense must need a severe warning not a simple caution. However is it right to shout a severe warning? Maybe the real problem of Lenovo phone is not from the phone itself.

A week ago, some media found that “according to the financial report in 2014-2015, only percentage of the R & D spending of Lenovo in 2015 accounts for 2.6% of total R & D spending over the years. The percentage in other year was lower than 1.9%. In the past 10 years, Lenovo has cumulatively devoted 4.405 billion USD in R & D that is far away from one-year’s R & D spending from Huawei.” The representative R & D spending from each science & technology enterprises in 2014 is Microsoft 10.4 billion USD, Amazon 6.6 billion USD, IBM 6.2 billion USD, Google 8.2 billion USD, Samsung 13.4 billion USD those accounting for 6.4 % of financial revenue. The difference between Lenovo and other companies is not only obvious but also fatal. In this era speed is competitive ability and innovation is life force of industry also.

We don’t clearly understand the real difference of R & D spending between Lenovo phone and other departments, but it may be small because it is controlled by China. In mobile phone area that is the most crazed competitive area in whole science & technology industry currently, it is hard to have specific attractive product and favorable price for common consumers without nearly crazed investment. Devott please all readers pay attention that the investment not only includes financial spending in acquisition, buyout or brand cooperation, but also more R & D investment, management investment in practice. Most of those investments can’t be showed in financial report within short-term, but those are basic requirements for getting long-term efficiencies. So for these enterprises’ decisions, how much decided power will be controlled by the department of Lenovo phone?

China’s enterprises have purchased and will purchase many local American companies, but only little companies fully play their bridge function in local places currently. The current confusion from Lenovo phone warns China’s enterprises those have ambitions. That is the investment of acquisition not only accounted in financial report of that year. After purchased IBM PC department, the whole Lenovo group in order to integrate paid hard experience for 5 years and gained some profits finally. For Lenovo at that time, the only reason of win and failure was PC. Now, how the Lenovo deal with phone?

This post is a personal or group view of Research and Advisory members and don't necessarily represent Dovott's positions, strategies or opinions.

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