With PC Sales Slumping, Lenovo Sees Consulting as a Way Out

* Lenovo revealed that tech consulting will be part of its “digital transformation” amid a weak PC market. The company has been consulting for years, but this is the first time it has publicly confirmed the fact

* Lenovo’s effort to transform itself into a company that sells both hardware and services could be challenging. For the six months ended September, the vast majority of its revenue came from the unit that sells PCs and mobile phones

(Beijing) — Lenovo Group Ltd. has announced plans to dive into the tech consulting business as part of its “digital transformation” as the global personal computer (PC) market remains in a slump.

Lenovo has been in the consulting business for years, but this is the first time that it made the fact public, the PC-maker announced at a media briefing in Beijing on Monday. It will initially target enterprises in “discrete manufacturing” sectors such as automobiles, petrochemicals and finance, Lenovo Vice President Tian Rihui told reporters.

This is Lenovo’s latest step in branching out from its core PC manufacturing business, under the banner of what it is calling its “digital transformation,” a process it started years ago. In 2018, Lenovo unseated U.S. giant HP Inc. as the world’s largest PC seller with around 22.5% of the global market, according to research house Gartner. However, demand for PCs remained sluggish, with the overall global PC market contracting 1.3% last year.

“Lenovo has over the years has ramped up investment in big-data services. This experience gives it an advantage in providing consulting services to companies facing similar tech challenges,” said Jia Mo, an analyst at research firm Canalys.

With the new consulting business, Lenovo is rolling into a competitive area involving dozens of players, including the U.S.-based IBM Corp., which sold its PC business to the private Chinese company in 2004.

Compared to IBM, Lenovo — as a China-based company — would have the advantage in providing services to domestic firms, according to Mo.

Still, Lenovo’s effort to transform itself into a company that sells both hardware and services could be challenging. For the six months ended September, the bulk of the company’s revenue — $22.12 billion or 87% — were from intelligent devices group (IDG), which include sales of PCs and mobile phones. Revenues from its Data Centre Group only accounted for 12.5%.

Tian told Caixin that revenue would not be a key driver for its consulting business in the near future and would focus first on integrating the company’s resources to improve services. “Digital transformation is a long process. We hope to build up a digital structure together with clients,” he said.

Contact reporter Mo Yelin (yelinmo@caixin.com)