Lenovo has reportedly increased its notebook inventory level to five months recently to prepare for its promotions for the year-end holidays and several market watchers believe Lenovo's move could lead to fierce price competition and affect notebook vendors' profitability in the fourth quarter.
Although notebook vendors increasing their inventory to prepare for year-end holidays is rather common, the level that Lenovo has prepared is rather high. Since finished products usually take around 1.5-2 months to reach the destination via marine transportation, having five months of inventory indicate that Lenovo will have at least three months of inventory in the channel waiting to be sold.
Lenovo also adopted a similar strategy in the second half of 2015 when the company reportedly was offering buy-one-get-one-free promotions in the channel to increase its notebook demand. This would create a dilemma for its competitors whose profits would be affected if they adopted the same strategy, and yet their sales would be impacted if they did not.
Data collected by Digitimes Research show that Hewlett-Packard (HP) is expected to have surpassed Lenovo to become the largest vendor worldwide in the third quarter, but Lenovo will have a chance rof regaining the leadership in the fourth quarter if the promotional stategy works.
Meanwhile, HP's notebook sales are expected to be impacted by the bankruptcy of Korea-based container carrier Hanjin Shipping in the fourth quarter as some of HP's product shipments have been delayed.
Source: Digitimes
