Lenovo looks to mobile internet for growth

PC maker Lenovo says that mobile Internet products will account for 10 to 20 per cent of its revenue in five years' time.

It is hoping to sell millions of smartphones in one to five years, and tens of millions in the future, said Rory Read, president and chief operating officer.

Mobile Internet devices, which include netbooks, currently make up a small percentage of Lenovo's revenues.

“The market in the smartphone space is just emerging in China,” Read said. “It's just the beginning.”

Chief executive Yang Yuanqing said the mobile Internet devices market would overtake traditional PCs in the next five years at an event in Beijing.

After selling off its cellphone unit to focus on its PC business, Lenovo bought the unit back last year in an  effort to become the Chinese market leader in mobile communications.

However, the company does not expect mobile communications to make a meaningful contribution to its bottom line for at least two years.

Lenovo launched a thin, touchscreen smartphone in January that runs Google's Android operating system.

Market research firms such as IDC and Gartner expect growth in smartphones to outpace PCs in 2010, leading to a flurry of new entrants into the sector.

The smartphone sector also offers greater profit margins than the PC sector, with net margins often in the low single digits for laptops and in the teens for smartphones.

Lenovo, reliant on corporate demand as a result of its purchase of IBM's laptop PC business, expects companies to start buying PCs again this year.

“I'm optimistic that the economic environment will continue to improve,” said Read. “I also see that the key business accounts - corporate and large enterprise, which are an important part of our business, are also improving and their activities are getting better.”

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