Lenovo's PC business does the impossible - gain market share while maintaining profitability

Lenovo is the number one PC OEM in Q2 2018, according to Gartner, pipping HP to the post, but remarkably the company did not do this by sacrificing profitability.

In their quarterly earnings press release, posted today, the company claims to have achieved “PC unit market share gains in every geography” while maintaining “industry-leading profitability of 5%.”

Lenovo also saw this as a continuing part of the path for the PC business going forward.

“In the future, we will maintain industry-leading profitability and premium to market growth in PCs,” said Yang Yuanqing, Lenovo Chairman and CEO.

Despite the growth in revenue and earnings, like most PC OEMs the company is looking to diversify. Lenovo continues to strive towards profitability in its Motorola smartphone business and to invest in ‘Smart IoT + Cloud’ and ‘Infrastructure + Cloud’.

The company earned US$11.91 billion in revenue, growing 19% YoY and pre-tax income during the quarter of US$113 million, an improvement of US$182 million year-on-year, as profitability improved across all businesses.

A bit like Apple, Lenovo likely achieved its strong results largely due to its strong brand and also due to delivering on their brand promise of reliability and innovation. With more of us willing to pay more for a good PC, good performance in the PC business should mean that the company will continue to invest in interesting products such as the Yoga Book 2, which will hopefully drive further innovation from other companies and competitors.

See Lenovo’s press release here.