In July, research firm Gartner reported that Lenovo had edged Hewlett-Packard (HP) to become the world’s leading personal computer maker.
The announcement, though, has come amid the longest decline in the PC industry's history, as tablets and even smartphones have become the computers of choice among consumers.
Africa, though, presents different challenges for PC-maker Lenovo. The potential for the personal computer market on the continent is largely untapped. And Africa’s high takeup of mobile devices is encouraging Lenovo to focus more on selling their tablet and even smartphone devices to buyers on the continent.
ITWeb Africa’s editor Gareth van Zyl has sat down with Lenovo’s general manager for Africa, Graham Braum, to discuss his company’s approach to particularly building an end-to-end market on the continent.
GARETH VAN ZYL: What’s the extent of Lenovo’s operations in Africa?
GRAHAM BRAUM: Africa is quite a broad term, because it incorporates so many countries. The African portion that I’m responsible for incorporates South Africa, all SADC (Southern African Development Community) countries, and East and West Africa, which is a fairly big patch in itself. I think if I look at Africa today, we are particularly strong in South Africa … and in the last twelve months since I’ve been here, (there) is really a phased approach on how we develop country by country. So, targeting East, West and SADC and really building the blocks. Building the blocks not just from what technology we’re going to be putting into the country, building an infrastructure. So first is understanding what we need to do from a services point of view, what we need to do from a recruitment point of view. I think it’s always important to have global strategy but you always need to localise it, which means that you need to find local talent, you have to be relevant to each country, you need to do focus groups in each country, you need to understand how enterprise works, how small and medium business works, how the consumer works. And then understand each of those segments end-to-end in order to put a solution in place. Really the focus for us … is making technology relevant for each country. So, it is a phased approach. That’s really what we’ve worked on for Africa. I think today if you look at the rest of Africa (outside of mature markets like South Africa) we’re showing four digit growth. But, yes, it is coming off a small base and it is a structured approach.
If you take a Kenya for instance, in one year we moved from 2% share to 12.6% share (of the country’s PC market), and that’s really through our focus, and that’s across multiple platforms. So, that’s across the enterprise: so looking after globals, government, corporate, really focusing on small medium business and delivering our solutions around that, which are based a lot around the ‘ThinkPad’ technologies. And then also focusing on consumer which incorporates very different products that encompases your convertables, your detachables, your all-in-ones, a lot of touch products today. And then wave two of that is really introducing, for the first time, products in the ‘PC Plus’ strategy.
We will normally drive the first wave in China. So, if we look at tablets today in China, we’re a very strong number two with a strong double-digit market share. And wave two was launching tablets into Russia, India, Indonesia. And then wave three was bringing it across the rest of Middle East and Africa. So, on tablets we’re in wave three, and now we launch a wide-range of tablets addressing both consumers as well as ‘prosumers’. So, we’ve got a full range of Android volume tablets. We’ve got a range of Windows tablets, we’ve got business tablets specifically for enterprise, based around the ThinkPad tablet. And that’s also encompassing some requirements that we see on corporate level. And then at the same time we have a range of detachables and convertibles both in our IdeaPad consumer range as well as in the ThinkPad range.
When I come back to Africa, in particular, there’s a whole other wave here because a lot of those countries haven’t been exposed to traditional (PCs). So, they’ve really been there, but it hasn’t been a big part of their development from ICT on traditional PC. On ‘PC Plus’ it’s totally different. Most African countries today have a very strong deployment of mobile devices and I’m talking smart handhelds, feature phones, smartphones.
But in my opinion, with the countries you will see a smartphone or a tablet being the PC of Africa in that country. Because that is the requirement for the next one or two million people in those countries insofar as a device that can connect to the internet is concerned. They will probably skip a generation from the traditional PC.
50% of Africa, the population is below the age of 17, so they’ve all grown up in the digital era. They know how a phone works, they know how touch works. A lot of them now want to move from the feature phone.
We still have an affordability matrix in Africa, and the majority of the portion of Africa is in a certain band and it comes down to this: I need a device, but it’s about an affordable device that can give me enough productivity in order for me to do what I want to do. They want to experience more than SMS for instance; they’ve had that and it’s great. Now, the question is do they want a smartphone where they can do a lot more, or do they want to experience a slightly bigger display. With touch they can do something more, which is going to be for instance potentially sub-250 dollars, and I think that is probably where we are today, where you’re going to see the PC of Africa being the smartphone or a tablet device, and that is going to become the productivity tool for Africa for the future, and probably across multiple segments, not just to the consumer.
If you look at total available markets from a PC point of view...let’s give an example of one from East, West and South Africa. South Africa, at the moment, if I look at PC category, we have more than 50 million people, but your total available market from a PC category point of view this year will be less than 2 million. So, it’s not a big market. And you have less than 10 million people in South Africa that have a device that can connect to the internet in South Africa, so, that’s the growth and the opportunity. We go to a market like Kenya with more than 40 million people, they only have a total available market from a PC point of view of less than 500,000, so, yes they have a very big smartphone...or feature phone penetration, it’s more than one-to-one, same as South Africa, but ultimately they’re ready for that next experience, because so few of them have got a PC like device. Then if you go to Nigeria, 170 million odd people, you’ve got a total available market there on the PC category of less than a million. But if you’ve got over 100 million subscribers when it comes to phone subscriptions.
But in that PC category are we going to see the big growth there? You will see a growth, but I believe the big growth will come in mobile internet, digital home which will be the ‘PC Plus’ side. That’s why I say based on that data, I don’t see those total available traditional PC markets going from one to 10 million, but I do see the PC plus mobile, digital home side really really going up in a big way.
GARETH VAN ZYL: Have you got research and development teams in Africa?
GRAHAM BRAUM: To be honest, the design teams are listening to what Africa wants for the first time. And I think it’s important because they are emerging and whatever it’s going to be we have different requirements, battery life for example is key.
That’s really what we’re doing today, a lot of proof of concepts, working with government and working with the people to understand what they require and then taking that to market.
We’re actually trying to be relevant in their countries by saying, we have a tablet. We have three or four or five applications that we have developed in conjunction with students … in your country, and now we’re going to bring it to market. And those applications are the key applications for everybody in that country as opposed to the device. So, we make the ecosystem the key, the device is just something that you need to drive that. And I think those are the things that we’re looking at today.
If a technology company today is just worried about the device, it’s going to be very difficult going forward. You really have to make the device work for the end user in whichever environment that they are in.
GARETH VAN ZYL: And what about smartphones? Last year, Lenovo was talking about bring a device to Africa?
GRAHAM BRAUM: Smartphones are very much like I said on the fourth screen policy on PC Plus. So, we’re shipping tens of millions of phones every quarter in China now, we’re a strong number two on phones in China. We did wave 2, which was the launch into Russia, and Indonesia. Now, we’re currently in wave three, and luckily that incorporates Middle East and Africa. So, three weeks ago we did the launch in Dubai for UAE and for Saudi Arabia. And those were our first two countries in Middle East and Africa. And the first three weeks has been really good; I think the launch was exceptional. We had more than 40 journalists really experiencing the product in Dubai and so far the sell-through has been really good. So, we’re excited. And the next wave is now us evaluating the opportunities in Africa, remembering that for each of these launches there’s a lot of work that’s done in the back-end. We’re not launching a PC. It’s a different infrastructure, different services requirement, different supply chain, different expectation for each country from a services model. And that’s really what we see with it at the moment. So, it’s a matter of time, we have to do our due diligence and do it properly.
We need to bring products that are relevant to the country and really what is the demand what do they want, what makes sense for them. And try to tailor our solution around the phone for what they require. And that’s really what we’re doing.
GARETH VAN ZYL: Apart from South Africa, where else do you have an office presence in Africa?
GRAHAM BRAUM: We’ve opened up a legal office in Kenya. The next wave is to open up a legal office in Nigeria, and we will then go country by country...we have deployed people into Tanzania, Uganda, Ethiopia if it is relevant, and we have done the work and discussions with government.
I think Kenya made more sense, we’ve been there now for 14 months. In Nigeria, we’ve probably been relevant there for 8 months now, but if I look at Uganda, Tanzania, Ethiopia, it’s been about 8 months.
Still quite new, in a lot of these countries we were doing business, but it wasn’t a structured business.
GARETH VAN ZYL: So did you do business in these countries through partners?
GRAHAM BRAUM: Partners, business coming probably from Dubai: we were there, we had a share, but it wasn’t in a structured format.
But what the roadmap will look from a legal office point of view, I couldn’t even give you an indication because it’s really going to be around the opportunities that we see and when is the right time. And I think it’s in this phased approach that we really identify those opportunities.
So, I think really what we’re doing is we have a global strategy, it’s probably within in everybody’s DNA within this organisation. The strategy for Africa is going to be phase by phase, country by country, and when we think the time is right, then we will engage in more requirements, more services. Pretty much the structure today in most of these countries is that we have a Lenovo field account manager that is really addressing the enterprise side of the business, that is addressing the channel...and addressing the consumer portion, which is very overlapped, because we don’t have structured retail like we do in Europe or even South Africa. There’s not huge shopping malls and all the rest of it. It’s coming, but it’s going to take time. Even on the retail side, it’s more of lets say the small shop type of interface.
The availability is going to be there, the affordability is going to be there, the connectivity is going to be there and boom, now you have a recipe for success.
GARETH VAN ZYL: Just in terms of Lenovo’s market share in Africa, what is the figure?
GRAHAM BRAUM: At the moment in Africa, we’re number three. We’re number three: PCs and smart connected.
We’re a part of Middle East and Africa with greater than 10% market share. But once again this is huge growth coming in a year from sub-5% we’ve double our share. And I think as we add more countries in Middle East and Africa from a focus point of view, so we believe we will grow.
GARETH VAN ZYL: Which are your top three biggest markets in Africa?
GRAHAM BRAUM: If I look at East Africa: you know, Kenya number one, probably a Uganda number two. But at the same time we hold a double-digit share in Tanzania and Ethiopia.
If I come to SADC, if we had to rank the countries, from a focus and a drive point of view, Angola, Zimbabwe and Namibia. But at the same time we have very relevant shares in the Indian Ocean islands and Botswana etc. And that’s why I’m saying, that’s it’s sometimes difficult for our headquarters and everybody, because Africa is so big and there are so many countries.
And yes, they might have big populations, but those markets are small from a PC point of view. So, take a country like Rwanda, where we do particularly well, the total market is literally 3-4000 pieces a month type of thing. We are doing well but that market’s still got to grow.
And then from a West African point of view, you know Nigeria and Ghana are extremely important for us. If I look at some of the french speaking countries, which fall under our other territory, which is called LENA, which is Levant and North Africa, we seeing like huge growth in the Congo for instance and Ivory Coast. I mean it’s really just booming and that region is doing particularly well with those countries.
GARETH VAN ZYL: What’s some of the big challenges that you guys are facing in Africa right now?
GRAHAM BRAUM: More opportunities than challenges is a good thing (laughs). But for sure, there’s no doubt it’s geographically, so supply chain, not supply chain to the countries, but supply chain across the country is one of the big things. And supply chain not in just physically putting the product in the hand of resellers or whatever, but was very much what I saying before, to have the reach. How do I get to the consumer market, when I look at country by country and province by province, the infrastructure is not there yet, there might be also if I take a small province in a country which has a high density in population, but potentially from an IT perspective, I have only one reseller in that province that can be relevant....I think from a broad-based distribution into the various areas just because of the geography. This is one thing we continue to work on. The second is connectivity, but we’ve discussed it and I think huge inroads have been made there. There’s no doubt it’s a huge obstacle. As I said we have to rely on 3G in order to drive technology to become relevant for the consumer because offline, we all agress offline none of these devices make any sense. And the affordability of the connectivity is the other one.
At the same time as you’ve got to find the wide distribution platforms to go into this geography, you’ve also got to find a service infrastructure which is not just in the CBD. It also has to be in outlying areas as well.
As more and more devices become available for more people, so you have to service a much bigger landscape. So, it’s like smartphones, now we’re talking about hundreds of thousands of these devices and obviously you have to have a very mature service infrastructure, service kiosks, those types of things. Hence a lot of work in the background before we launch those kinds of devices.
GARETH VAN ZYL: What do you do in your free time?
GRAHAM BRAUM: Analyse the competition (laughs). No, I’m joking (laughs). I’m a huge sports enthusiast, I played many years of rugby as a true South African -- more than a hundred first division games, so that was a passion. Now, I’ve become much older, so, now I can only shout at the TV and support my side (laughs). So, sport remains a huge interest of mine. I’ve played most sports. Today, unfortunately it’s mostly golf, and I chase the white ball around instead of the oval one (laughs). But I still play a lot of golf. So, I try in each of my country visits to experience golf courses there. I play as much as possible. In South Africa, a lot of investment in my kids, so, they become the other hobby I suppose and I spend a lot of time with them, doing a lot of things with them. Fun walks, runs and all those things. Red wind (is also) a passion.
I’m a Durban boy, so I’m a huge Sharks supporter. I’m getting a lot of abuse lately, we haven’t exactly got too much silverware. I remain focused. I don’t change my team, so, Sharks through and through and then all my sins as well my football side since four or five is Liverpool as well. I have had a lot of pain as well in the last couple of years. Luckily, locally I’ve grown up supporting Pirates and we’ve had a lot of success there, so, at least I’ve had one thing I could shout about!
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