Hands up who wants a PC? Lenovo reports declining returns
- Reference: 1692276313
- News link: https://www.theregister.co.uk/2023/08/17/lenovo_pc_sales/
- Source link:
Turnover from sales for Lenovo's [1]Q1 of its fiscal 2025 ended [PDF] June 30 fell by almost a quarter year-on-year to $12.9 billion and net income plunged 66 percent to $177 million, albeit better than the prior quarter's profit dive.
It is now a full year since the the world's largest PC maker reported growth – and a world away from the middle of the pandemic when every desktop and laptop it could produce was flying off the shelves.
[2]
"Last quarter, the macroenvironment presented challenges, and our hardware business remained in a phase of adjustment, but we persisted in executing our strategy," Lenovo chairman and CEO Yuanqing Yang said in a statement.
[3]
[4]
The strategy is to [5]reduce $150 million in costs to counter the slowdown in the Intelligent Devices Group (IDG), which houses the PC biz; to grow other areas of the portfolio, such as infrastructure kit and services; and to invest in R&D to find the next killer hardware device.
IDG, which accounted for the lion's share of Lenovo's operations, declined 28 percent to $10.26 billion. It was a case of yet again trying to clear excess inventory across its channels. At points during the pandemic, Lenovo stock was [6]one third of normal levels – how it would love to return to those business dynamics.
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"Sell-in activity was affected but its rate of decline moderated compared to previous quarters. The channel inventory in most regional markets returned to a healthy level by end of quarter under review," Lenovo said. Efforts to expunge stock caused profit margins to dip considerably.
[8]Judge denies HP's plea to throw out all-in-one printer lockdown lawsuit
[9]4 in 5 Chromebooks sold to US students in Q2 as demand rises
[10]Fujitsu pulls the plug on European client PC sales
[11]Intel pulls plug on mini-PC NUCs
Lenovo global shipments into the channel shrank 20.8 percent in calendar Q2, Gartner data shows. This allowed nearest rival HP to narrow the gap as it declined 0.9 percent. The general sentiment is that PC sales may start to grow again from the second half of this year or from 2024 as the economy lifts and refresh cycles kick in.
[12]Reduced demand for smartphones also added to IDG's diminishing fortunes – nobody is growing in that market segment either.
As for the Infrastructure Solutions Group (ISG), it declined 8 percent to $1.9 billion. Lenovo said: "Refresh cycles are extending across Cloud Service Provider and enterprise and small and medium business efforts amidst efforts of enterprise customers to rein in spending."
"Together with slower than expected platform transition and economic headwinds, ISG's compute server revenue declined by double-digits year-on-year," it added.
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The Solutions and Services group was up 18 percent to $1.7 billion, with Support, Managed, and Project & Solutions services all expanding.
Lenovo said it hopes pressures on the global economy will ease, and while PCs are "regressing" to pre-COVID-19 norms, it expects them to rebound to well beyond the annual 300 million mark in the medium term.
That sounds like wishful thinking. ®
Get our [14]Tech Resources
[1] https://doc.irasia.com/listco/hk/lenovo/interim/2024/int1q.pdf
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/personaltech&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2ZN5ELWaVQCMDVQoSxcf5XAAAA8Q&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/personaltech&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZN5ELWaVQCMDVQoSxcf5XAAAA8Q&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/personaltech&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZN5ELWaVQCMDVQoSxcf5XAAAA8Q&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[5] https://www.theregister.com/2023/02/17/lenovo_q3/
[6] https://www.theregister.com/2021/02/03/lenovo_on_pcs/
[7] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/personaltech&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZN5ELWaVQCMDVQoSxcf5XAAAA8Q&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[8] https://www.theregister.com/2023/08/11/judge_denies_hps_request_to/
[9] https://www.theregister.com/2023/08/08/4_in_5_chromebooks_sold_to_us_students/
[10] https://www.theregister.com/2023/08/07/fujitsu_eu_pc_sales/
[11] https://www.theregister.com/2023/07/11/intel_nuc_shutdown/
[12] https://www.theregister.com/2023/06/01/smartphone_industry_struggles/
[13] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/personaltech&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZN5ELWaVQCMDVQoSxcf5XAAAA8Q&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[14] https://whitepapers.theregister.com/
Re: Good timing for me?
Indeed. I love the ThinkPad line but they are not cheap by any means, some discounts on them would be most welcome!
Re: Good timing for me?
My T480 is nearing its end of life. My colleague had an L480 and joined a month after me, but it died a couple of months back - it looks like that generation of Ls had a lot of problems with dry soldering joints, bad BIOS updates, it throttled itself to 400Mhz on several ocassions, for example.
Re: Good timing for me?
Or invest in your (and the world's) future with a frame.work ?
Re: Good timing for me?
Not a new concept, but nobody has succeeded on making it work yet in the long term.
These guys may just be able to get it right, thanks for the info!
“ demand for personal computers continues to slump in the face of a crappy economy.”
Are you sure it’s a crappy economy and not plain stupidity in the numbers reporting and analysis?
So we’ve had a couple for years of exceptional demand due to CoViD and people working from home, however, nowthings are returning to normal, it’s a “crappy economy” because people are not buying like they were in lockdown. Perhaps a more sane analysis would be to compare this years figures with the years prior to CoViD to see the real extent to which demand may have fallen in what is a mature market.
Evidence of poor analysis comes in the last few patagraghs: “PCs are "regressing" to pre-COVID-19 norms” ie. the current levels of shipments are still higher than pre-CoViD shipment levels, which without the CoViD peak would be cause for celebration.
It's worse than that. Pre-COVID, only people who really wanted or needed a laptop purchased one.
Along came COVID and suddenly, everyone needed one.
Now the splurge is over, and hardware no longer increases performance 10% per year. You can buy the lowest cost phablet and still manage your email and watch YouTube without issue.
It's going to be at least three more years before anyone feels like they actually need a new laptop - barring hardware failures, of course. For most people, they've got one and they don't use it any more, so it'll just pick up dust until they change jobs.
Sorry, Lenovo, my crystal ball doesn't give a very favorable outlook to your future CEO bonuses.
The big selling point of Thinkpads was ease of repairability and upgradability. The trend towards soldered-in memory and non-upgradable storage means a lot of people who were previously happy to pay a premium to buy a Thinkpad don't see the point any more. One of their big selling points has gone, so why bother?
Louis Rossmann [1]has the same theory . Can't say I disagree.
[1] https://www.youtube.com/watch?v=aypukOqFFE8
No wonder
If my experience this year is anything to go by, it's a wonder they sold any machines at all - I gave up trying to buy from them after multiple orders were sat on for a month at a time before being just cancelled.
As per Zippy's comment, their laptops are off my list now that practically all of them are Apple-style disposable junk.
banned entity list
If you sell to the US you regularly have to fill in forms stating you don't knowingly use equipment from companies in the banned entity list (Huawei, Hikvision, etc).
It's not unthinkable that Lenovo might one day be added to that list, which for us was enough of reason for a blanket ban on new Lenovo purchases. Who wants the hassle of replacing several thousand laptops? Fuck that.
Good timing for me?
My 5 year old laptop is approaching the end of its life. Problems with keyboard not always turning on, probably a duff connector in the hinge.
Wait another month until they all start to panic and grab a bargain.