Isla Ramos (Lenovo): 'A product sitting on the shelf starts to become obsolescent after seven weeks'
'The net margin on a laptop is 3%, so we must constantly innovate,' explains Lenovo executive director at 'Matins ESADE'. According to Ramos, Lenovo's market share has grown from 10.1% in 2010 to 21.5% in 2016
Barcelona, June 2, 2017
‘The business of selling technological devices is very aggressive. A product on the shelf enters obsolescence after seven weeks and the net margin on a laptop is just 3%, which means that we must be constantly innovating,’ explained Isla Ramos, executive director of Lenovo, in a new session of 'Matins ESADE' sponsored by Bluecap with the support of ‘La Vanguardia’.
Isla Ramos reviewed the history of Lenovo – which bought the IBM personal computers division – and explained that: ‘you cannot manufacture much product in advance because it becomes obsolete so quickly, and therefore you are constantly solving today's problems. The exciting thing about working with a Chinse business vision is the ability to plan and innovate over the long term, which is crucial in this sector. In the West, in contrast, we are much more short term in our thinking’.
Lenovo appeared in the market in 2004 and grew out of the Chinese firm Legend Holdings. ‘Lenovo trades in more than 160 countries and is the world's largest manufacturer of personal computers. The company has grown organically – creating mobile devices and so on – and inorganically by buying other companies. ‘Buying firms is sometimes necessary because you cannot afford to wait five years to develop a new business,’ Ramos explained.
‘Lenovo's case is unusual because we have become number one when no one knew our brand,’ Ramos explained. ‘Branding is very associated with the goods we make. However, Lenovo did not go into mass consumption products until 2012 as we were previously positioned in high-end business-to-business products, and so it was very difficult to establish the brand.’
‘Today we have changed from a company with a single product – PCs – to a multi-device company with televisions, smart watches, and so on – which means a change of business model and process perspective. Devices and the whole ecosystem have changed as all devices are now connected,’ she added.
Ramos explained how Lenovo's market share has grown from 10.1% in 2010 to 21.5% in 2016, meaning that Lenovo sells four devices worldwide every second. ‘When you grow at this rate, it is impossible to fully digest the changes,‘ she claimed. ‘Our marketing target audience are millennials. We are trying to think ahead, because when millennials begin to reach positions of responsibility we want them to have grown up with our brand’.