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Lenovo Punting On AI As Retailers Clear Out Old Stock For New Qualcomm Snapdragon PC’s

Lenovo a key JB Hi Fi PC partner, is tipped to be a major player in the roll out of a new generation of artificial PC’s including new models using Qualcomm Snapdragon X Elite processors which the Company is banking on to lift their consumer revenues during the next 12 months.

The Company that is known for their cutting-edge Yoga PC designs for consumer notebooks, and their Think Pad B2b notebooks, is counting on demand for artificial intelligence to deliver an earnings recovery ahead of their competitors.

Lenovo is among the earliest to introduce AI PCs, which is a brand-new notebook and PC workstation category with added artificial intelligence features, largely powered by Windows software.

The appeal of such devices has yet to be proven, but there are expectations that AI notebooks will become a new growth driver that kicks off in 2024 and grows further in 2025 according to Bloomberg Intelligence analyst Cecilia Chan.

For retailers such as JB Hi Fi and Harvey Norman the issue has been “excessive notebook inventory” that is now being cleared out of stores with ageing stock set to be replaced by a totally new generation of AI machines.

Retailers in Australia are confident that the new generation notebooks with the new Snapdragon X Elite processors will restimulate a flat market that has been in decline for more than 18 months following a boom during COVID lockdowns.

The Lenovo Yoga Slim 7x and the Lenovo ThinkPad T14s Gen 6 are the company’s first to feature the long-awaited Qualcomm Snapdragon X Elite processor that has ignited a battle between Intel and Qualcomm with the supplier of processors to the bulk of Android smartphone manufacturers in a strong position to strip share away from Intel claim analysts.

Yan Yuanqing, chairman and CEO of Lenovo claimed yesterday that the global Company who are #1 in the PC market, are “optimistic” about the Companies prospects for AI.

When asked specifically about any downside risks, not just from AI but for the company as a whole, he again stressed “AI is set to deliver a “ bright future” for PC Companies.

“Definitely, we are optimistic on AI,” he said, adding that it will “transform all our businesses.” He expects that AI will not only enhance its core PC business but also those for tablets and smartphones as well as infrastructure and services. And he believes the new AI-driven business cycle could have a long life.

Lenovo’s Intelligent Devices Group continued to deliver a solid quarter, strengthening its global market leadership for PCs with a market share of 22.9%, a significant premium to the market, and industry leading profitability. Revenue for the quarter was US$10.5 billion, and for the full year was US$44.6 billion.

The PC business was no. 1 in four out of five geographies, achieving record high market share in the USA.

Their Motorola smartphone business also delivered remarkable growth, growing double digits in both shipments and revenue year-on-year, with substantial premium to the market.

IDG’s profitability for the full year was described as resilient, in spite of a weaker than expected market in the first half of the fiscal year. PCs, tablets, and smartphones all resumed growth in the second half of the fiscal year.

Last night in Sydney Motorola which is 100% owned by Lenovo used the skills of professional photographer Stuart Spence to demonstrate the new Motorola Edge 50 Pro and how the use of AI is delivering professional images using a built in 50-megapixel senor to shoot both landscape and up-close portraits with the AI software coupled with AI calibration able to deliver what Spence described as “Perfect pictures”.

For several PC brands AI appears to be a key saviour and the means to motivate consumers to upgrade to a new generation of PC.

In the last quarter ending in March 2024, Lenovo doubled net to US$248 million, beating the US $158.4 million average of analyst estimates.
Sales in the period were $13.8 billion, also above the expected $13.1 billion.

The business reported an overall operating loss, however, and Lenovo said it sees a shortage in AI accelerator supply and weaker spending on other server equipment, though the supply gap is “showing signs of narrowing.”

Lenovo grew PC shipments by close to 8% in the March quarter, to 13.7 million units, according to market tracker IDC.

China a key market for Lenovo is the world’s biggest consumer of desktop PCs, and the slump in sales in China is a trouble spot for device makers, with Lenovo hoping that the AI trend may help offset that.

Analysts claim that what retailers such as JB Hi Fi and PC manufacturers such as Lenovo are going to benefit from is the increase in margins that a Qualcomm Snapdragon Elite PC delivers.

“Along with growth in shipments, AI PCs are also expected to carry higher price tags, providing further opportunity for PC and component makers,” Ubrani said.

At the briefing, Yang noted Lenovo had reached 40 years since its inception. “For our fifth decade, probably the key thing will be AI,” he said.

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