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China PC market up for grabs between Lenovo, Acer

Posted: 31 Oct 2007 ?? ?Print Version ?Bookmark and Share

Keywords:PC market?

In the current battle between Lenovo and Acer, who will win in China's PC market?

According to CCID Consulting's latest report, over the short term, Acer will restrict Lenovo's global expansion in the segment, but it does so by undertaking great risk. The market researcher is optimistic on Lenovo's development and pays more attention to the effective integration of brand, business and culture.

Story of rivalry
The global PC market has been shaken throughout the year, noted CCID. The battle and layout contest between Lenovo and Acer pushed them to become the leading players in China's PC field.

The competition between the two has a long history. In 2004, after acquiring IBM's PC scope, Lenovo joined the top three in the PC field. In 2006, however, with the market share's rapid growth, Acer caught up with Lenovo. Today, the competitive trend transfers from behind the curtain to the stage, spurred by Acer's acquisition of Gateway.

According to CCID, both Lenovo and Acer rank as China's elite PC producers, but each employ different global strategies and layouts.

In the global PC market, the Asia-Pacific, North America and Europe are the most important central markets that enterprises aim to occupy. Lenovo's dominant market is the Asia-Pacific excluding Japan. Its sales volume accounts for 60 percent of the total sales, while market share accounts for 20 percent of the total market. In the European market, Lenovo's market share is only 5 percent, and its users concentrate around business scope, following HP, Acer, Dell, Toshiba and Xerox. It is thus urgent for Lenovo to figure out how to develop in the American and European consumption markets. And as expressed by Yang Yuanqing, Lenovo president, the next objective for Lenovo is to copy its successful experience in China to the American and European markets after the acquisition of IBM's PC scope and business integrator.

Lenovo had proposed to set up the transaction and customer relationship business model, and aimed to apply the business model in both the American and European markets. Due to its unique position and profile, Packard Bell had come into Lenovo's view. In August 2007, Lenovo and Packard Bell reportedly reached an acquisition consensus.

Stealing Lenovo's thunder
However, in late August, Acer announced its decision to acquire Gateway for $710 million to battle Lenovo's expansion. Acer's dominant markets are Europe, Africa and the Middle East, and its market share accounts for 20 percent. But Acer has plenty of room to improve in the Asia-Pacific market. Moreover, the company aims to penetrate the North American market via Gateway.

CCID Consulting considers Acer's acquisition to be strategic, but one that carries its own risk. The acquisition also puts the onus on Lenovo. Yuanqing said that Lenovo is now developing the new global business model aimed at individual consumers and small enterprises in Germany and India. If Lenovo could succeed in these two markets, it will win in any market, forecasted CCID.

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