Lenovo exec: We didn't realize how big touch would be

Gerry Smith, Lenovo's recently named president of the North America region, tells CNET the industry underestimated demand for touch on computers.

The Lenovo IdeaPad Yoga is one of the Chinese computer maker's newest products. Sarah Tew/CNET
Nearly every day seems to bring another dismal report about Windows 8 and the PC market.

If the forecasts and comments are to believed (and they largely are), few consumers are buying computers, opting instead for the iPad or other tablets. And if people actually want to buy the more innovative computers out there, like the ones with touchscreens, they have a hard time finding them in stores.

But Gerry Smith, who sat down to talk with CNET today after recently being named Lenovo's president of the North America region, said those suppositions are only partially true.

The industry did underestimate touchscreen demand, he admitted. But people are still buying PCs -- at least from Lenovo. In addition, sales of premium-priced computers are growing faster than other PC segments, he said.

"Lenovo's a little different from other companies," Smith said. "We're still seeing strong growth and a strong premium to the market overall...And this quarter, we're seeing strong growth across all product segments."

As Smith pointed out, Lenovo has proved to be somewhat of an anomaly in the global PC market. It has consistently been gaining market share while its rivals pull back, largely because of its high exposure to the Chinese market and its strong operations selling computers to businesses.

In the third quarter, tech research firms Gartner and IDC estimated that Lenovo's global PC shipments climbed about 10 percent from the previous year , a stark contrast with Hewlett-Packard and Dell, which posted double-digit percentage declines. During that period, Gartner said, Lenovo passed HP to become the world's biggest PC vendor, though IDC, which includes workstations in its tally, kept Lenovo at No. 2. In the U.S., however, Lenovo still lags significantly behind HP, Dell, and Apple.

Smith said that's going to change. While he declined to give a time frame, he said Lenovo eventually will be the biggest PC vendor in the U.S., as well as worldwide:

Being No. 4 in the U.S. is a solid position, but it's not acceptable long-term for us...We will be No. 1 in the U.S. That's absolutely a focus. I'm not going to give you a time frame, but six-and-a-half years ago, Lenovo wasn't even on the radar screen worldwide. No one thought we could do it...We're tied for No. 1 today, and we have the right trajectory compared to the other company that's No. 1. The U.S. is a similar analogy to the worldwide market but just different timing...We're going to get to No. 1 over a period of time.

Lenovo and its rivals have been counting on the latest version of Microsoft's operating system, Windows 8, to help bolster PC sales. So far, it doesn't appear to be helping much. NPD, another tech research firm, last week said that U.S. sales of Windows 8 devices during the initial four-week launch of Windows 8 dropped 21 percent compared with the same period a year ago.

However, Smith said that six months down the road, people will look back and determine the Windows 8 launch was pretty consistent with prior releases of the software.

And as CNET noted yesterday , touchscreen PCs generally are selling well. That's resulting in widespread supply shortages, but Smith said that should get better soon.

"As you go through any major architectural transition, you try to forecast accurately how much the attach rate will be on touch [or other features]," he said. "Across every major [shift] over the past 10 years, we're never right. The learning is, how do you respond to that? How does the industry change and evolve?"

The Lenovo ThinkPad Twist. Sarah Tew/CNET
In the case of touch, Smith said the industry will have to evaluate how it was so off about the demand and figure out what it can do to prevent that in the future.

He noted that touch panel supply is already improving, and more touch capacity should be available in the January-to-June time frame, helping ease some of the supply shortages experienced by PC vendors.

That's important because more and more computers will likely shift to using touch panels.

Smith estimated that about 50 percent of Lenovo's PCs -- not including tablets or smartphones -- will have touchscreens within the next two to three years.

He added that missing the forecast for touch this time around was actually "great news."

"The tough question would have been if touch was a disaster, wasn't selling, and we had all this much supply," Smith said. "I view it selling well, a shortage, everyone chasing supply as a huge positive because it shows market potential and it shows a huge market opportunity."

Smith has been with Lenovo for nearly seven years. Before being named head of North America late last month, Smith oversaw Lenovo's global operations, including its supply chain, procurement, supply/demand planning, and quality management.

 

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