Lenovo Loses Top PC Spot to HP

(Beijing) — Lenovo Group Ltd. lost its spot as the world’s top PC-maker in the first quarter of 2017, a setback for its core business as it struggles to turn around a poorly performing smartphone unit.

One of China’s best-known high-tech brands controlled 20.4% of the global PC market in the first quarter, well behind HP Inc.’s 21.8%, according to data tracking firm IDC. Lenovo managed to post 1.7% growth in the quarter year-on-year, but that was well behind a 13.1% surge for HP.

The flip-flop marked the first time since 2013 that Lenovo failed to take the top spot in the global PC rankings. Gartner, one of the other major firms that tracks PC shipments, said earlier this week that Lenovo maintained its No. 1 position in the first quarter by a slight margin, winning 19.9% of the market to HP’s 19.5%.

Despite their differences, both Gartner and IDC said HP posted strong growth for the quarter, while Lenovo’s PC sales grew by just 1%.

“HP has been creeping up on Lenovo for some time now, and will likely continue to put pressure on Lenovo, including in key markets like the U.S.,” IDC analyst Bryan Ma said. “HP has been building out its portfolio, including services that Lenovo is not as well-equipped in, like PC as a service.”

Ma said the situation doesn’t qualify as worrisome for Lenovo just yet.

“ ‘Ominous’ is too strong a word, as Lenovo will still be fighting for that throne in the years ahead,” he said. “But HP is undergoing resurgence, especially with Dion Weisler, who ironically is formerly from Lenovo, running HP now.”

Lenovo was one of China’s earliest high-tech companies to go abroad, making global headlines when it bought the PC assets of global titan IBM about a decade ago. It made more headlines when it took the global PC crown in 2013, and soon afterwards proclaimed that smartphones were its next target as consumers gravitated more toward mobile devices.

But the company’s smartphone foray has suffered a number of major missteps, led by lackluster performance of the faded Motorola brand that it purchased more than two years ago. Lenovo previously reported its profit plunged by two-thirds in its most recent fiscal quarter, with revenue down 6% as a small gain in PC sales failed to offset a plunge for its mobile business.

As the company’s fortunes have declined, its shares have lost nearly two-thirds of their value over the last two years.

Contact reporter Yang Ge (geyang@caixin.com)