Lenovo is now world's largest pc maker

This is not true. Lenovo is a PC-Maker, it assembles 30 % of their PCs in own factories. They have factories in Japan, China, India, Mexico, Brazil and in the future also in the USA.

 

Lenovo is aiming for Apple, HP isn't really their biggest concern.

 

Then Lenovo needs to set their sights lower. They are nowhere near Apple.

For Lenovo to compete with Apple, they need better execution on all fronts. I would say flawless but even Apple isn't flawless.

The X1 Carbon launch was poor. And that was the 20th anniversary ThinkPad.

 

Yeah, anyone can aim, or talk about aiming, or whatever. There is a gulf of difference between selling a lot of assembled stuff and creating great stuff. Then again, you may shoot yourself in the foot by sabotaging your own occasional great items.

 

Not disputing, but wondering: where did that 30% number come from? I know they took over Sanmina-SCI's assembly operations a few years back, and I was wondering if that shift was the result of that or other more recent acquisitions (Medion, for example.)

I know that Lenovo does still use Compal and Wistron (and probably other contract manufacturing companies). I wonder if the plan is to ultimately move everything in-house?

 

Thats what Lenovo says (taken from different interviews with Lenovo managers).

Yes, they do. They also have a Joint-Venture with Compal ( Lenovo Newsroom | LENOVO TO EXPAND PC PRODUCTION CAPACITY THROUGH COMPAL JOINT VENTURE) since last year, 51% Lenovo and 49% Compal, named Lienpal. It will start production in two big new factories in Hefei next year.

Maybe not everything, but they will increase their in-house-production. They have now 5 factories in China, 1 in Mexico, 1 in India and in the near future 1 in the USA ( Our Locations - United States). With the acquisition of the Brazil-based CCE they will also get 7 factories in Brazil, and near in the future the NEC factory in Japan is going to produce ThinkPads. They also think about 1 factory here in Germany (they would use and expand the current Medion factory here). So, in combination with the joint-venture with Compal, which will produce only Lenovo products, they will expand their in-house production massively. The Taiwanese-companies are afraid as I heard.

 

If Lenovo actually switch from outsourcing to OEM/ODM to the in house model it'll be a huge change in its business model. They have the advantage of having a strong design team, globally recognized brand, and an international sales team. But they are also based in China and can organize massive manufacturing operations. It's like Apple and Foxconn merges. I don't think this is the direction they are going, but it's definitely an interesting thought.

 

It would definitely be unusual if Lenovo seeks to consolidate and design, fabricate, & build the majority of their systems themselves. If they do, it will be the exact opposite of what Asus did. Asus used to have a very high percentage of vertically-integrated manufacturing, but in order to appease their OEM customers, they spun off the manufacturing unit as a separate company. Currently, I believe less than half of Asus computers are built by Pegatron (their spin-off).

What's interesting by the comparison is that these two companies that may be going in opposite directions regarding self-manufacture are the only 2 computer brands worldwide that seem to continually be increasing in notebook sales.

 

I think the common theme there is that both of them have phenomenally strong design and engineering teams, and both have an excellent track record of executing on their designs.

HP had the advantage of a strong sales presence, but (from what I've heard) their horrible upper management effectively knee-capped them. They couldn't commit to a long-term strategy, and without long-term plans everything just kinda falls apart gradually.