Lenovo to become world’s biggest PC maker ‘this year’, say analysts

Lenovo will overtake Hewlett-Packard to become the world's biggest vendor of PCs by the end of the year, according to sales figures from both IDC and Gartner.

The firm is currently poised in second place with a market share of 14.9 per cent – just 0.6 percentage points behind market leader HP (15.5 per cent) – according to IDC's latest figures for the second quarter.

Lenovo is well ahead of both one-time market leader Dell, which is in third place with a share of 11.1 per cent, and fourth-placed Acer, with 10.4 per cent; Asus is fifth with a share of 7.1 per cent.

Over the past year, Lenovo's global market share has risen by three percentage points from 11.9 per cent, partly aided by its acquisition of German PC maker Medion and a joint venture with Japan's NEC. HP, meanwhile, has seen its share slip 2.1 percentage points from 17.6 per cent in the same period.

At the current rate of convergence, Lenovo could overtake HP as soon as the third quarter – if PC sales hold up and do not slump unexpectedly as they did in 2011. However, the key market in China is expected to post lower rates of growth as its economy slows, and growth in the global PC market remains flat.

Market demand for computer devices has shifted to smartphones and tablets, after a surge (and equally abrupt fall) in demand for netbooks between 2008 and 2010.

Lenovo's growth has been supported by a combination of acquisitions and keen pricing, although analysts also warn that its margins have been pinched as a result. Its operating margins are just 1.4 percentage points, compared to HP's 7.4 per cent and Dell's 6.2 per cent, according to Thomson Reuters data.

The company changed its name from Legend in 2005 when it acquired computer giant IBM's PC manufacturing business, which had been in decline for more than a decade.

Another key story emerging from the latest figures is the rapid decline in the market share of Dell, which was once the market leader, having boasted a global share of 16.8 per cent at its peak in 2007.

The latest figures indicate a year-on-year decline for Dell of 11.9 per cent globally, and 9.2 per cent in its core US market, where it is second to HP, with Apple in third place.