For months, market commentators have been speculating that Lenovo could be interested in purchasing BlackBerry Ltd (NASDAQ:BBRY) to jump-start its mobile strategy.
With companies like Apple, Samsung, HTC, and Motorola dominating the market for smartphones in the US, Lenovo lacks a solid strategy when it comes to mobile devices — right?
Except it doesn’t. Lenovo actually sells more mobile devices than PCs. And it’s the world’s biggest PC maker.
Lenovo’s latest flagship phone, the K900, was released earlier this year. Notably, it has an Intel Corporation (NASDAQ:INTC) chip inside. If Lenovo is going to save a tech company, it’s likely to be Intel — not BlackBerry Ltd (NASDAQ:BBRY).
Lenovo’s push into mobile devices
Lenovo’s push into mobile devices has focused on its home country, China. In fact, about 80% of the firm’s smartphone sales come from China, which may seem limiting, but given China’s immense population, that was enough to earn Lenovo a top spot in terms of smartphone production.
In the second quarter, research firm IDC said Lenovo was the fourth largest smartphone producer, behind only Samsung, Apple and LG.
Lenovo has catapulted into a top slot by focusing on the lower-end of the market. Its phones are primarily aimed at budget-conscious consumers — would-be buyers in markets like China and India simply cannot afford $700 phones.
But Lenovo’s latest phone, the K900, is actually fairly pricey. It’s not available in the US, but in India it retails for about 25,000 rupiah — or about $400.
It also comes equipped with Intel Corporation (NASDAQ:INTC)’s Atom Z2580 processor. The phone was first released in China back in May. At the time, Lenovo swore that the flagship phone would help it to surpass Apple and Samsung as the world’s top smartphone-maker.
No doubt, that’s a lofty goal, but certainly achievable. It only took the company 7 years to surpass Hewlett-Packard as the world’s biggest PC-maker; given its rapid growth in mobile, anything is possible.
Could Lenovo buy BlackBerry?
The possibility of Lenovo rescuing BlackBerry Ltd (NASDAQ:BBRY) shareholders has been raised many times in the past. When questioned, Lenovo executives have made vague comments, never directly affirming or denying the possibility.
With BlackBerry Ltd (NASDAQ:BBRY) now officially declaring that the company is for sale, will Lenovo buy it?
It seems highly unlikely. Lenovo is doing fine in the mobile space, and doesn’t need anything BlackBerry Ltd (NASDAQ:BBRY) has to offer.
Lenovo’s phones, including the K900, run Google‘s Android operating system. With the smartphone market stabilizing as a duopoly (Android and iOS), Lenovo has nothing to gain by switching over to BlackBerry’s BB10.
The BB10 operating system, while an innovative new take on mobile, continues to lag where it matters most: apps. BB10 app support has been poor. As BB10 devices have sold poorly, there is simply no incentive for app developers to waste limited resources on BB10 development.
Anyone holding BlackBerry shares in the hopes of a Lenovo buyout should consider selling. While it’s certainly possible that BlackBerry gets sold to someone, that someone likely won’t be Lenovo.
Intel has suffered as the traditional PC declines
Intel Corporation (NASDAQ:INTC) shares have lagged the S&P 500 in recent years, as demand for its chips has declined. The vast majority of Intel’s profits and revenue comes from the sale of its chips, which are mostly used in desktop and laptop PCs.
Intel Corporation (NASDAQ:INTC) has begun to gain a slight foothold in mobile with the introduction of Windows 8 tablets. Tablet/laptop hybrid devices, like Microsoft‘s Surface Pro, utilize an Intel chip.
But the when it comes to the truly popular mobile devices — iPads, iPhones, Android devices — Intel Corporation (NASDAQ:INTC) is largely a non-player.
Admittedly, Intel did score a big win with the Samsung Galaxy Tab 3. The next version of Samsung’s popular Android tablet will run on an Intel chip.
But the deal with Lenovo could be even bigger. If the K900 is a hit overseas, it should boost sales of Intel’s Atom chips.
More importantly, if Lenovo is committed to becoming the world’s biggest seller of mobile devices, maintaining a relationship with the Chinese tech giant should benefit Intel.
There’s no guarantee that future Lenovo devices will run on Intel chips, but with the relationship established, it’s entirely possible.
Overall, Intel investors — or investors interested in the company — should keep a close eye on Lenovo’s growing strength in the mobile market. If Lenovo continues to grow, and continues to turn to Intel for chips, the once-dominant chip-maker could snap back from its mobile-fueled decline.
Lenovo rides to the rescue
Lenovo doesn’t need BlackBerry to become a player in mobile — it already is one of the world’s largest smartphone makers, and has its eyes set on the top spot.
That might be an unrealistic goal, but given Lenovo’s success in the PC market, it’s possible.
If one company — other than Lenovo of course — stands to benefit from Lenovo’s rise, it’s Intel. Lenovo’s decision to put an Intel chip in its flagship K900 lends credence to Intel’s mobile strategy, and suggests that Intel might have a strong future in mobile chips.
The article Lenovo Could Save Intel, Not BlackBerry originally appeared on Fool.com and is written by Sam Mattera.
Sam Mattera has no position in any stocks mentioned. The Motley Fool recommends Intel. The Motley Fool owns shares of Intel.
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