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Despite Billion Dollar Decline In Sales Lenovo Still Confident About Gaming

By David Richards | Monday | 30/05/2016

Lenovo, the Chinese Company that has been caving up the Australia consumer PC market has hit a wall with the Company reporting a 19% slump in revenues, they also missed their revenue targets by more than $1 Billion.

In Australia the Company has been trying to get their gaming PC range off the ground via an exclusive deal with Harvey Norman a move that appears to have backfired with several Harvey Norman franchisees telling ChannelNews that they are struggling to sell "premium priced" gaming machines.

According to Nick Reynolds Regional Marketing Director at Lenovo, the Chinese Company "Is very happy with the early success in entering the ANZ Gaming PC market. We are encouraged by the launch of the Lenovo gaming products in partnership with Harvey Norman and sales results so far in 2016" he said.

While Lenovo has captured over 12% of the consumer market in 18 months. Brendan Lau the man Lenovo hired to drive their consumer initatives from Hewlett Packard, not released their sales results for their gaming products.

Lenovo global sales were $9.13 billion in the three months ended March, Lenovo said last week, missing the average of analyst projections by more than $1 billion. Net income of $180 million compares with expectations for $184.9 million.

The company that will hold a major tech event in the USA on June 9th is focusing more on overseas markets and cutting costs after slipping outside the top five globally, compounding the challenge of a shrinking PC industry that is hurting its biggest business by sales.

"We continue to see that Lenovo holds limited advantages and lacks a coherent strategy in a slowing and competitive smartphone market," analysts led by Ken Hui at Jefferies Hong Kong Ltd. wrote in a report. "Management should explore more drastic options."

Despite the downturn, its global PC market share for the year rose to 21 per cent, and Lenovo reported record market share in tablets, ranking third with nearly 11 million units shipped in the year. Lenovo also shipped 12.1 million PCs in Q4.

Enterprise also saw 73 per cent year-on-year annual revenue growth.

Going forwards, Lenovo says it will 'attack new growth areas - such as gaming and detachable - in the expanded PC market' and 'continue to take advantage of consolidation to strengthen revenue performance'.

At the IFA trade show in Berlin Lenovo spelt out a major initatives to grow their share of the gaming market. Reynolds is confident that this can still be achieved despite the Company not selling their gaming range at JB Hi Fi where they are having a lot of success selling their consumer notebooks.

Reynolds believes that the Asia Pacific gaming market is a "growth" market. Intel research revealed in the below graph that the market consists of 91M active gamers and that the Australian PC gaming market is growing at the expense of console gaming.

35M are seen as hard core gamers, 40M moderate gamers and 16M casual gamers. The combination of casual and moderate gamers totalling 56M is giving Lenovo confidence that they can take on the likes of ASUS, Acer and Delll with their Alienware gaming ranges. 

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