Lenovo smartphones are marketed as the "LePhone" in mainland China, and as the "IdeaPhone" overseas (designed and manufactured by the Motorola Mobility, ZUK Mobile and Medion, divisions of Lenovo). On April 27, 2017, Lenovo announced that the ZUK brand would cease operations. In 2015, Lenovo subsumed its own smartphone division into the acquired Motorola brand.
Marketing and sales growth
Lenovo has implemented an aggressive strategy to replace Samsung as mainland China's top smartphone manufacturer. It spent $793.5 million in Wuhan to build a plant that can produce 30 to 40 million phones per year. Data from Analysys International shows that Lenovo's China smartphone sales experienced considerable growth in 2012. Lenovo's market share increased to 14.2 percent during 2012's third quarter, representing an increase over 4.8 percent sales growth in the same quarter of 2011. IDC analysts said that Lenovo's success is due to its "aggressive ramping-up and improvements in channel partnerships. "Analysys International analyst Wang Ying wrote, "Lenovo possesses an obvious advantage over rivals in terms of sales channels." The company's CEO, Yang Yuanqing, said, "Lenovo does not want to be the second player ... we want to be the best. Lenovo has the confidence to outperform Samsung and Apple, at least in the Chinese market."
Yang Yuanqing said that Lenovo's strategy for Lenovo devices dictates an emphasis on its home market of China and emerging markets such as Russia, Indonesia, India, and the Middle East. Lenovo planned significant product releases in those markets in 2013. Yang said Lenovo is pursuing this strategy due to its thin pre-tax profit margin of only 2.6%. He said, "If you don’t have enough scale, if you don’t have enough volume, it’s hard to make money. If you don’t have enough market share, it’s hard to make money," Yuanqing says. "That’s why we enter the markets one by one. When we enter a market, we want to quickly get double-digit market share."
The LePhone, as Lenovo smartphones were called in China, is offered at a relatively low price point and is customized for the Chinese market. The LePhone benefited from strong support from Chinese mobile carriers and content providers such as Baidu, Alibaba, and Tencent. Having seen rapid growth in China's smartphone market, Lenovo has begun efforts to raise its share in the high-end market by cooperating with Taiwanese chip designer MediaTek in 2012. According to IHS iSuppli, Lenovo was a top-three smartphone maker in China with a 16.5 percent market share in the first quarter of 2012. According to a May 2012, report released by IDC Lenovo ranks fourth in the global tablet market by volume. In November 2012, Lenovo became the second largest seller of mobile phones in China when measured by volume.
Lenovo planned to release its smartphones in Nigeria in the second half of 2013 in an effort to find markets where it can sell directly to consumers. Lenovo picked Nigeria, because unlike South Africa and other African countries, there is no requirement to partner with a local telecom firm to sell its phones. Lenovo will sell its phones across as many as six price segments with the most expensive selling for about US$500. Lenovo said it was investigating the rest of Africa and that Egypt would be its next target for expansion.
Lenovo began selling smartphones in Kazakhstan in November 2013. In the same month, Lenovo announced that it would start selling phones in at least 20 new markets "in the next few quarters." Lenovo said these markets would include the Middle East, Africa, and Latin America. Yang Yuanqing said that Lenovo decided to accelerate its expansion after success in Indonesia where Lenovo achieved 13-percent market share in one year while achieving higher profit margins than it earns in China.
Lenovo sold about 50 million smartphones in 2013. The same year Lenovo increased its smartphone sales by 60% from 2012. Most of these sales took place in China where low and middle-end smartphones were still in great demand.
Lenovo has assembled a team of senior managers familiar with the Indian market, launched mobile phones at all price points there, and worked on branding and marketing in order to build market share. As of February 2014, Lenovo claims that its sales of smartphones in India have been increasing 100% per quarter while the market is only growing 15-20% over the same period. Lenovo did marketing tests of its smartphones in November 2012 in Gujarat and some southern cities, where Lenovo already had a strong presence. Lenovo's strategy has been create awareness, maintain a broad selection of phones at all price points, and developing distribution networks. Lenovo partnered with two national distributors and over 100 local distributors. As of February 2014, more than 7,000 retail outlets in India sold Lenovo smartphones. Lenovo has also partnered with HCL in order to set up 250 service centres in 110 cities.
In March 2014, Lenovo announced that it would release smartphones in the United Kingdom. Lenovo said that the launch would go forward regardless of whether or not its deal to purchase Motorola wins regulatory approval. As of March 2014, Lenovo was working with Vodafone and other carriers to ensure that its phones are compatible with their networks. Lenovo expects to release its first products intended for Britain at the IFA trade show in Germany in September 2014. Lenovo said that entering the British market would take about nine months due to the fact that most phones in the United Kingdom are sold with service contracts. Carriers have strict requirements for the phones they sell. Lenovo plans to use its current distributors, Exertis Micro-P, Ingram Micro, and Tech Data to sell its mobile phones.
In late April 2014, Lenovo announced that it projects selling 80 million smartphones worldwide in the fiscal year that began on 1 April. Lenovo said that it expects smartphones and tablets to drive its profits in 2014. Yang Yuanqing said, "We have to look outside China for a bigger market share and higher profit margins." He also stated that adding that its partnership with Google, owner of the Android operating system was getting stronger due to Lenovo's acquisition of Motorola Mobility.
In the fourth quarter of 2014, Motorola's sales grew by 118% year-on-year on a unit basis. Lenovo generally maintains geographic separation of the "Lenovo" and "Motorola" brands in smartphones. For example, Japan where as of May 2015, neither brand of phone was sold, will be reserved exclusively for Motorola. In China, both brands are sold after the re-introduction of Motorola smartphones after a two-year absence. Both brands are also sold in India. Lenovo announced in April 2015, that the two brands would continue to operate separately in India.
Branding The "Le" series of devices, including the LePhone, LePad, and the LeTV (Not to be confused as the LeTV series of hardware and streaming platform by LeEco) were sold under the "idea" brand outside of China. The LePhone was thus known as the "ideaphone" in other markets. The "Le" pre-fix means "happy" in Mandarin Chinese and this branding is only used in mainland China.
In early 2013, Lenovo signed an endorsement deal with Kobe Bryant. Lenovo says Bryant was selected in order to further internationalize its brand while appealing to young consumers. Bryant made numerous appearances on behalf of Lenovo and was its main smartphone marketing campaign of the year in Asia.
Mergers, acquisitions, subsidiaries, and partnerships Lenovo sold its mobile phone division in 2008 to focus on its personal computer business and then paid $200 million to buy it back in November 2009. Lenovo re-acquired its mobile division to focus on mobile internet devices such as smartphones and tablet computers.
Motorola Mobility On 29 January 2014, Google announced it would sell Motorola Mobility to Lenovo for US$2.91 billion in a cash-and-stock deal. When Google and Lenovo first announced the acquisition of Motorola, they said the purchase would be funded with $660 million in cash, $750 million in Lenovo stock, and a $1.5 billion promissory note due in three years. As of February 2014, Google owns about 5.94% of Lenovo's stock. The deal includes smartphone lines like the Motorola Moto X and Moto G and the Droid Maxx. Lenovo also acquired the future Motorola Mobility product roadmap. Google will retain the Advanced Technologies & Projects unit and all but 2000 of the company's patents. Larry Page of Google said of the sale that "the smartphone market is super competitive, and to thrive, it helps to be all-in when it comes to making mobile devices. It's why we believe that Motorola will be better served by Lenovo—which has a rapidly growing smartphone business and is the largest (and fastest-growing) PC manufacturer in the world."
Yang Yuanqing stated that "the acquisition of such an iconic brand, innovative product portfolio, and incredibly talented global team will immediately make Lenovo a strong global competitor in smartphones." Yang also said, "Don’t be scared by the $1 billion-a-year loss. We will improve that even from day one. Google is very good at software, ecosystems and services. But we are stronger in the manufacturing of devices." Yang said that Lenovo would make Motorola profitable within six quarters.
In March 2014, Yang Yuanqing said that Lenovo would continue using the Motorola brand name. Yang said that he wanted to exploit Motorola's reputation as an excellent manufacturer in North American and European markets. He used the term "mind share." Yang said that Lenovo planned to tie itself to Motorola in the minds of consumers with a tag line such as "Motorola by Lenovo" or "A Lenovo Company." As of May 2014, Lenovo was the fourth largest phone manufacturer in the world by unit sales, putting it behind Apple, Samsung, and Huawei. However, Lenovo owes most of its mobile market share to China, which is the world's largest market for mobile devices. According to reports, Lenovo has received about 2 million smartphone orders from China.
Lenovo believes that Motorola will help put it on the map as mobile device maker in developed markets such as the United States and Europe. Yang Yuanqing said, "Motorola is a good brand with worldwide awareness. This is the company that invented mobile phone, not just smartphones. Motorola will give us a good retail relationship. It has a strong portfolio of IP and rights and will help us become one of the clear global leaders. We will not be satisfied with number three, we will want to be number two in the future."
Lenovo had expressed interest in acquiring Motorola's hardware business immediately after it had been acquired by Google. Three years later, Lenovo's successful bid for Motorola Mobility began with a phone call from Eric Schmidt, asking if Lenovo was still interested in an acquisition. Lenovo immediately expressed interest. Liu Jun, an executive vice president at Lenovo in charge of mobile devices, said, "We first approached Moto when Google first announced the acquisition. Google was the owner of Android and we thought maybe it wouldn't want to own the hardware side of the business," said Liu Jun, EVP President of mobile for Lenovo to TechRadar. To us, it was clear that Google wanted to own the IPs. So we thought we had an opportunity to own the hardware side. Google initially tried to do the hardware itself but then a year and a half later they reconsidered their strategy. The end of last year we got a call from Google, from Eric Schmidt. We were asked if we still had the interest. We always thought Motorola was a good buy so we said yes and signed the contract quickly."