Lenovo’s Wuhan factory lockdown over Covid-19 could hit India’s tablet sales

Number one.
Number one.
Image: Reuters/Bobby Yip
We may earn a commission from links on this page.

Covid-19 could dent the supply of tablet PCs in India as market leader Lenovo is hit.

One of the electronics giant’s biggest factories is in Wuhan, the city at the heart of the global coronavirus scare, and remains shut. Its manufacturing facilities in Shenzhen and Hefei, though, resumed production on Feb. 10 after a mandatory shutdown that began in January-end.

“With the coronavirus outbreak impacting manufacturing supply chain…we believe tablet shipments would see a further dip towards (the) end of Q1 (January-March), and more realistically in Q2 2020,” said Prabhu Ram, head of Industry Intelligence Group (IIG) at consulting and advisory services firm CyberMedia Research (CMR). The near-pandemic could potentially cause up to 8% dent in tablet shipments in the second quarter of this year.

Chinese manufacturers control 40% of India’s tablet market, and January-March is a seasonally weak quarter, given the Chinese New Year holidays. To tide over this, sellers usually build inventories. However, this year, companies have not been able to run their plants at full-throttle due to Covid-19.

Yet, Lenovo has some runway to maintain its lead in India.

Lead intact

With a nearly 37% share in 2019, Lenovo was perched on top of CMR’s leaderboard for tablets in India for the tenth consecutive quarter at the end of December 2019.

“During the course of 2019, the average sales value (ASV) for tablets in India increased, indicating a latent demand from enterprise players for variants with higher-end specifications,” said Kanika Jain, manager of client device research at IIG.

Besides Lenovo, Apple was the only manufacturer whose market share did not erode in 2019. With the launch of iPad 7, Air & Mini over the course of the year, the Cupertino firm garnered the highest share in the premium segment. In the Rs30,000-plus ($411) segment, where Apple dominates, Lenovo could capture only a minuscule share of buyers.

The majority of Lenovo’s tablets are priced between Rs10,000 and Rs20,000. At this price point, it’s making a big business play.

“Lenovo’s buyers are mostly in the enterprise segment, wherein market opportunities abound in eGovernance services, healthcare, and hospitality, among others,” said Ram. “Lenovo has been aggressive with its enterprise outreach strategy and has had some good wins in the government and education sector. It has been able to outshine other brands with its tablet offerings as well as market connect.”

The new decade may have begun on a bleak note for the Chinese brand but it will likely bounce back. Lenovo, also the world’s largest PC supplier, is coming up with workarounds. It plans to ramp up production across its Brazil, Mexico, US, and India factories.