Is LENOVO GROUP making a comeback again?

A New Opportunity for LENOVO GROUP in the AI Era

The famous slogan "What if the world loses LENOVO GROUP?" once deeply resonated with people, reflecting the past glory of LENOVO GROUP.

However, time never waits. In the fierce competition of the consumer electronics industry, although LENOVO GROUP still holds the top spot in the global PC market, it has quietly lost its luster due to the industry's downturn and perceived mediocrity in technological innovation.

To turn the tide and avoid becoming the next Nokia or BlackBerry, LENOVO GROUP must find a new path forward.

The advent of the AI era has presented LENOVO GROUP with a rare opportunity. Following the vision of "AI for All" proposed last October, LENOVO GROUP is actively advancing its AI development roadmap.

At the recent Mobile World Congress (MWC), LENOVO GROUP unveiled a range of new AI PCs and edge computing solutions, showcasing two innovative products challenging the traditional designs of personal computers and smartphones.

AI is revitalizing the PC industry, which was once declared "dead." In addition to PC manufacturers making strategic layouts, many tech companies have also joined the wave of exploring new opportunities in AI PCs.

Technological transformation signifies the imminent disruption of the traditional PC industry, leading to a reshuffling of industry rankings; HP and Dell have long coveted LENOVO GROUP's throne.

To maintain its dominance in the AI era, LENOVO GROUP must step up its game.

Opportunities

The year 2023 has just passed, marking a bleak period for the PC industry.

According to Morgan Stanley, the entire PC market hit a 20-year low in 2023. Factors such as the popularity of mobile devices, lack of innovation, market saturation, and intense competition have contributed to the industry's decline.

While acknowledging the market's challenges, research firm Gartner remains cautiously optimistic. In the fourth quarter of last year, global shipments increased by 0.3% compared to the same period the previous year, ending a two-year trend of declining shipments.

Canalys predicts that the emergence of AI PCs is poised to revitalize the market and enhance user experiences, potentially becoming a turning point for the PC industry. This view is gradually becoming a consensus within the industry, with some boldly stating that 2024 will be the year of AI PCs.

LENOVO GROUP is eager to seize the opportunities brought by AI PCs.

In December of last year, at the inaugural AI PC Industry Innovation Forum, Amu, Vice President of LENOVO GROUP and Vice President of Strategic Development for the China region, stated that PCs are entering a third historic technological cycle, marking a critical moment for the global PC leader, LENOVO GROUP. At LENOVO GROUP, they move fast. At the beginning of this year's CES, LENOVO GROUP took the lead in showcasing over ten AI PC products, with 9 of them already launched in the Chinese market. At this year's MWC, LENOVO GROUP has unveiled the latest generation of business AI PCs, including the 5th generation ThinkPad T14 and ThinkPad T14s.

However, currently, these products can only be said to have some AI features, far from being considered revolutionary innovations or true AI PCs.

At this MWC, LENOVO GROUP also unveiled the latest concept product, the ThinkBook transparent screen laptop. This is a 17.3-inch Micro-LED transparent screen laptop concept that combines AI with transparent display technology. LENOVO GROUP hopes to open up a new way of interacting with data and applications through this, providing possibilities for developing new features and forms.

Yang Yuanqing, Chairman and CEO of LENOVO GROUP, stated, "At MWC, LENOVO GROUP has launched a series of intelligent devices, intelligent infrastructure, intelligent services, and solutions empowered, guided, and optimized by AI, fully demonstrating our vision of 'making artificial intelligence benefit everyone'."

In Yang Yuanqing's vision, the first generation of AI PCs should have five core features: first, the ability to run compressed and performance-optimized large personal models; second, stronger computing power; third, larger storage; fourth, smoother natural language interaction; fifth, more reliable security and privacy protection.

According to LENOVO GROUP's plan, the computing power of the first generation of AI PCs can reach 40 TOPS and is expected to be officially launched in the second half of this year. In the next 1-2 years, LENOVO GROUP plans to gradually provide better AI performance, more natural interaction forms, and further accelerate AI applications by integrating with more software.

With the launch of these new products, LENOVO GROUP is also trying to shed the label of "mediocrity."

Counterattack

Once, for many Chinese people, the first computer that came to mind was LENOVO GROUP.

In 2004, LENOVO GROUP's $1.25 billion acquisition of IBM shocked China and became a classic "snake swallowing an elephant" business acquisition case.

Back then, few people knew Huawei's founder Ren Zhengfei, while LENOVO GROUP's founder Liu Chuanzhi was already a young career idol. At its peak, LENOVO GROUP not only topped global PC sales and Chinese smartphone sales but also acquired IBM's x86 servers and Motorola's mobile business. Over the past decade, LENOVO GROUP has long lost its former glory.

In terms of market value, today's LENOVO GROUP is only worth billions, far behind those top tech companies worth trillions. Some believe that LENOVO GROUP's biggest problem is that it no longer belongs to the top-tier tech companies.

The mainstay of LENOVO GROUP, the PC business, is growing slowly, suffering defeat in the Chinese smartphone battlefield, and not making significant achievements in core technology fields, which has become a major factor in LENOVO GROUP's "mediocrity." This remains the main issue for LENOVO GROUP at present.

Wang Peng, Deputy Researcher at the Beijing Academy of Social Sciences, told Wall Street News that in recent years, LENOVO GROUP's performance in innovation has not been outstanding, especially in emerging technology fields such as artificial intelligence and the Internet of Things. This may put LENOVO GROUP at a disadvantage in future competition.

Historical experience has shown that every new technological revolution brings about a new round of industry reshuffling. The AI wave has put LENOVO GROUP on the same starting line as PC industry veterans like HP, Dell, Apple, and Asus. They need to make more changes to seize the opportunity to become leaders in the wave.

LENOVO GROUP has taken a number of actions.

In August last year, Yang Yuanqing announced an additional investment of over 7 billion yuan to accelerate the deployment of artificial intelligence technology and applications globally. This year, he further stated that LENOVO GROUP will focus on artificial intelligence and computing, continue to increase the number of R&D personnel, and is expected to reach the highest historical R&D expense ratio in the full fiscal year 2023.

In addition to AI PCs, LENOVO GROUP is also developing more AI-embedded smart terminals, as well as focusing on AI-driven infrastructure and AI-native solution services.

If all goes well, LENOVO GROUP will emerge as a giant in artificial intelligence in the future, and people will not only associate it with PCs. This is a crucial battle for LENOVO GROUP. Despite facing numerous challenges, in the face of this technological wave that is reshaping human society, LENOVO GROUP cannot afford to fail.