PCs aren’t so core anymore – Lenovo buys back into mobile

In early 2008, home computer maker Lenovo span out its mobile device division. The mobile arm of the company went public because the group wanted to narrow its focus down to the “core” computer business. And now Lenovo is buying that division back into the company for twice the price it sold it for.

Some background:

Lenovo has been around in one form or another since the 80s, and has had the same focus the entire time: computers. From building desktop machines, laptops and netbooks to servers, monitors and software, Lenovo is a veteran of computer manufacturing. It is the 4th largest computer maker in the world, and the biggest one in China with over quarter of the market.

So when Lenovo Mobile, the phone making arm of the group, was underperforming, the group didn’t think twice about selling it. Lenovo Mobile was only selling handsets in China, and it wasn’t pulling in much in the way of revenue. In order to focus more on the competitive home computer market, Lenovo sold it to a group of investors just over $100 million.

Now what?

Lenovo Mobile has been doing pretty good for itself! It has been reliably profitable since Lenovo dropped it off, and is the 3rd biggest phone seller in China. And… well, just look at the Chinese smartphone market! First of all, there are over 700,000,000 mobile subscribers in the country. Just taking China Mobile, roughly every 13th person is on its network. And while smartphones and higher-end devices are definitely selling there, they still aren’t as popular as less advanced, plain old phones. The fairly crippled device from Dell is selling, while iPhone numbers were disappointing. All the major Chinese networks are pushing for more advanced services, better networks and newer devices.

What we think?

China is where you want to be selling mobiles right now. If current trends are any indication, Lenovo will make its $200 million back and more in the next few years.