Chinese electronics giant Lenovo has lately been focusing on its smartphone business. After launching a few 4G LTE smartphones under Rs 10,000, the company has now launched K3 Note, with a big 5.5inch display at Rs 9,999. Taking on the competition such as Xiaomi Mi 4i and Meizu M1 Note, Sudhin Mathur, Director, Smart Phones, Lenovo shares the company's plans for the Indian market in a conversation with Nidhi Singal of Business Today.
Q. How has the journey from a PC player to a smartphone maker been for Lenovo?
A. When we came into this business, there was hardly any base. We were setting up the distribution, the brand, portfolio and today we have come a long way. This is a transition from a PC to the PC plus company. Lot of people still consider Lenovo as a PC maker but now people has started to recognise us as not somebody who is into PC but also in tablets and smartphones.
Q. In which price segment do you sell the most?
A. In India, 80 per cent of the consumers are below Rs 10,000 and that's where consumers are buying. So our sales are also aligned. If I was to compare with Indian brands, I will say we are at the higher level of segment but if I had to compare with more multinational brands, we are at the lower segment. We are at a market average.
Q. What are the price segments where you will be focusing in the coming years?
A. We have smartphones ranging from Rs 4,000 and going up to Rs 25,000. We divide it into three broad categories: the sub $100 category (which is under Rs 6,000), the second would be the $100-$200 category (between Rs 6,000 to Rs 12,000) and the third would be the rest. We see 80 per cent of our sales coming from the first two segment and 20 per cent from the rest. So far our biggest strength has been $100-$200 segment. Above Rs 12,000, it is all about the experience. There, we have our Vibe proposition which is the premium category. We are focusing on retail in this segment because many buyers will like to experience the phone before buying. So there, of course through the traditional distribution we are going strong.
Q. Is Lenovo Smartphones focusing on online retail only?
A. People don't write so much about offline retail and that is why online is getting highlighted. But there is a lot happening in offline retail. This journey of online is only about five six months old for us with Flipkart but traditionally, we have been an offline company with our distribution. We continue to do a fairly exciting job as we reach out to about 7,000 outlets throughout the country, covering more than 200 odd cities. Apart from that we have 1,200 Lenovo stores across the country where we have been traditionally selling PCs. But we are slowly introducing smartphones in these stores. Right now we are focusing on top 200 of those stores where we will ensure we have a display zone where consumers can see and experience our smartphones. For us, the market is moving towards tier 2 and tier 3 cities. When we launched our A1000, we sold across 1,000 cities and people purchased it Andaman and Nicobar Island.
Q. When you have such as strong offline presence, why are you stepping into the flash sale model?
A. For us, flash sale is short-term strategy. We want to give equal opportunity to everyone who wants to buy our phones. We don't want to go with first come first serve system. Initially, our launch volumes are less and are not enough to cater everyone. The flash sale model allows everyone interested to register and give equal opportunity to buy it. Once we have enough stocks, we make it available openly, without any flash sale model.
Q. You are very active with online retail model and have launched a last couple of smartphones with Flipkart. So can you tell how much sales are coming from online retail or offline retail?
A. We are very strong in offline retail with 80 per cent of our sales coming from this segment. Online model is contributing 20 per cent sales.
Q. How much is India contributing to the global smartphone sales for Lenovo?
A. Our smartphone business has been growing globally. India's share has always been the largest: 47 per cent of the smartphone business comes from the rest of the world (apart from China) and India is one of the biggest contributors to this number. I can't state a particular percentage but the very fact that you see so much excitement happening with one million phones getting sold off, we are on a very fast growth strategy.
Q. With smartphone accessories garnering a lot of interest, is Lenovo also focusing introducing accessories for its smartphones?
A. Most of the accessories that we had as of now were in-the-box accessories. We had headphones, chargers, cases and batteries. So far we have bundled everything inside. The lifecycle of the product is small-six months is when people start looking to replace their smartphones. And even purchase of accessories are moving towards the time of purchasing the handset, not later on when they use it. We are moving into innovative accessories such as selfie flash, which works with almost all the phones; Vibe band and much more. For K3 note, we are going to announce a very nice ceramic speaker. That is where the real accessory business is going to be. None of these accessories have been launched in India yet and we are contemplating how to make it available to the consumer in India, be it offline or online. These accessories will be posted for purchase on our online store as well.
Q. Lenovo has recently announced smart shoes and smart band. Will they come to India anytime soon?
A. These are the newer concepts announced recently. If there is a demand, I don't see why they should not come to India.
Q. How do you plan to take on the competition?
A. We are globally number one brand in PC space, number two brand in PC plus tablets and number three where smartphones are concerned. We haven't reached there just by chance but a lot of thorough process and hard work has gone into this. Coming back to India, this is a very competitive market. Lot of people will come as the growth rate is very high. So people will come to the country. But we have seen it in the past that whosoever is a strong brand and has a long-term commitment towards the market will survive. Motorola is now a Lenovo company. So these are the bold moves that we are taking towards strengthening our position in the market. Combined, we are already at the 5th position in the Indian market.
Q. Are you planning to set up a manufacturing unit or an R&D centre in India for Lenovo smartphones?
A. At this stage, our current facility in China is catering to the global requirements. But we appreciate government's initiative and will make some announcement when we have explored all the options.
Q. What kind of service support do you have in India?
A. We have three national service partners and more than 350 service centres across the country.