Lenovo's smartphone shipments in first-quarter 2015 reached only 8-9 million units, lower than the volume that Digitimes Research had previously estimated and about the same as the level a year ago due to high inventory built up during the fourth quarter of 2014. Lenovo brand image is relatively weak in the smartphone market and the fact that it has two smartphone brands - Lenovo and Motorola Mobility - is not helping its marketing. The two brands overlap in their targeting market segments and pricing ranges.
Lenovo started pushing its 4G smartphone shipments at the end of the third quarter 2014 and achieved shipments of around 15 million units in the fourth quarter of 2014. Judging from Lenovo's component orders placed with the upstream supply chain in early 2015, Digitimes Research originally had expected Lenovo to ship at least 10 million smartphones in the first quarter.
However, the China-based vendor's smartphone sales have been heavily relying on telecom carriers, and it shipments were greatly affected by quickly rising inventory in the fourth quarter of 2014 as China's telecom carriers had significantly adjusted their subsidization plans for handsets, weakening sales of smartphones bundled with telecom services.
Meanwhile, Lenovo has been finding it difficult to build up a strong brand image in the local smartphone market. After launching the Lemon series product line for online marketing in December 2014, Lenovo has adjusted its smartphone lineup and is offering its Vibe series devices for the CNY1,500 and above price segment, the A series products for the sub-CNY1,000 price segment and the telecom channel, and the Lemon series for the sub-CNY1,000 price segment and the online market. But the China-base vendor's moves have so far been unable to improve its brand recognition.
Lenovo originally expected the dual-brand lineup after its acquisition of Motorola Mobility would benefit its operation in overseas markets; however, the strategy instead is causing the two brands to compete against each other.
The Motorola brand has seen stable demand in North America, and has also achieved significant results for its recently launched inexpensive smartphones in emerging markets such as Latin America and India. Against such a background, the China-based vendor introduced the inexpensive Motorola smartphone models to China in the first quarter, and the sales results were impressive. But Lenovo did not expect that such impressive results would come at a price: its Lenovo-branded phones were cannibalized by the Motorola devices.
