Lenovo, bolstered by its strong growth in North America, emerged unscathed after global personal computer shipments in the first quarter fell 14%, marking the industry’s worst quarterly decline. Lenovo’s worldwide shipments were flat in the three months to March, compared with a year earlier. The company was the only one among the industry’s biggest players that did not record a double-digit decrease in shipments in the period. Research firms IDC and Gartner estimated that Lenovo shipped 11.7 million personal computers and seized a 15% market share during the quarter to nearly close the gap with global leader Hewlett-Packard. Both IDC and Gartner also found that Lenovo’s first-quarter shipments to the United States grew 13% year-on-year to 1.3 million units. Lenovo remained the No 5 supplier in the U.S., the world’s second-largest market for personal computers after China. Gartner pointed out that Lenovo’s performance was affected by the slowdown in the Asia-Pacific, in which personal computer shipments dropped 10.3% year-on-year to 27.6 million units. A Spokeswoman for Lenovo said the company “continues to outperform its traditional PC competition”, and that “there is still plenty of room to raise marketshare in this market”. IDC said the extent of the year-on-year contraction in the past quarter marked the worst period since the research company began tracking the personal computer market quarterly in 1994.

Lenovo said it was in “preliminary negotiations” about an acquisition following reports that the Chinese company may purchase International Business Machines Corp’s server unit. IBM is seeking USD5 billion to USD6 billion for its x86 server business, according to information technology industry news website crn.com. In April, Chen Xudong, Senior Vice President and General Manager of Lenovo’s China unit, told China Daily the company is considering mergers and acquisitions (M&As) to strengthen its enterprise business. Lenovo is slowly shifting its focus from PCs to mobile devices such as smartphones and tablets. In the meantime, it is also seeking new frontiers in enterprise-level products and services because of higher profit margins. In 2012, Lenovo and U.S.-based data-storage company EMC Corp formed a joint venture to develop server and storage equipment. The two companies released their first co-branded server and storage products on April 2. The negotiations with IBM meanwhile seem to have reached an impasse. Lenovo is holding firm on getting “a reasonable price”. “The talks haven’t broken down, but there is a gap in the valuation [of the target business] between the buyer and the seller,” a person familiar with the discussions said.

The company is planning new marketing campaigns to place key products in various films and television shows this year. Lenovo Chief Marketing Officer David Roman said investing in the high-profile branding initiative was part of Lenovo’s goal to create a premium global brand “that resonates with our target youth audience” and to become known as “the world’s leading personal technology company”. He said Lenovo’s new IdeaCenter Horizon table computer, which will sell from early this summer for USD1,699, was the kind of “innovative product placement we’re trying to do because it is interesting”. The device, which has a 27-inch multi-touch display and Microsoft’s Windows 8 operating system, can be adjusted upright at a 90-degree angle for use as an all-in-one desktop computer, with separate keyboard and mouse. One of Lenovo’s high-profile product placements was in the 2011 Hollywood blockbuster, “Transformers: Dark of the Moon”. The movie introduced a new character called Brains, which transforms into a ThinkPad Edge Plus laptop.

Digital Realty Trust, the world’s largest builder and wholesale provider of data centers, will start its foray into China next year, with projects planned in Shanghai and Beijing. Digital Realty Chief Executive Michael Foust said the company was in discussions with various major information technology service providers on initial projects in those two cities. “Having domestic partners with strategic relationships in the market and knowledge of local IT services opportunities is important because we’re looking at very long-term investments,” Foust told the South China Morning Post. Prior to that expansion initiative, Digital Realty will open in November its first data center project in Hong Kong at a 15,236 square meter site in Tseung Kwan O. The San Francisco-based company and its joint-venture partner, information technology services provider Savvis, are redeveloping an old industrial property into an advanced data center, which will cater to multinational companies with growing operations in the city. Kris Kumar, Digital Realty Senior Vice President in charge of Asia-Pacific operations, said total investments by the two partners in this project would reach up to USD160 million once it was completed. As of the end of February, Digital Realty owned 119 data centers, excluding three held as investments in joint ventures, in 32 markets worldwide. Foust said the company’s total data center construction expenditure this year would be between USD900 million to USD950 million, up from about USD800 million last year. A report by British firm BroadGroup Consulting in February said the expansion of data center capacity in China would accelerate over the next few years due largely to domestic demand. The report estimated that overall investments in new data center projects across at least 15 provinces would reach USD370 billion by 2016.

Samsung, Apple and Chinese brands like ZTE and Huawei will continue to grow in the domestic market this year while Nokia, HTC and Motorola are expected to face pressure on their sales, U.S.-based research firm IHS iSuppli said. The recent emergence of “phablet”  phones such as Samsung Galaxy Note, a combination phone and tablet which usually features 5-inch or bigger screens, will become a trend, according to Kevin Wang, IHS iSuppli’s China Research Director. Apple and Samsung will continue to expand in the high-end smartphone market as they tap their brand awareness and unveil top-of-the-range handsets. Meanwhile Chinese brands like ZTE and Huawei will increase their market shares in the entry and mid-level segments through price-competitive models, according to Wang. But Nokia’s sales will continue to fall this year while the market shares of HTC and Motorola are expected to “slightly drop” only because of the still growing market demand, Wang added. The global sales of phablets will hit 60.4 million units in 2013, up from 25.6 million last year, IHS iSuppli said.

China will add 60 million broadband users and 100 million 3G users in 2013 as well as improve bandwidth speed nationwide under the “Broadband China” project, the Ministry of Industry and Information Technology (MIIT) said. This year 35 million users will be added on its high-speed fiber-to-the-home (FTTH) network, up from 94 million by the end of last year. The Ministry will also increase the normal home broadband user base by 25 million to 200 million by the end of this year. The Ministry said 70% of all users nationwide will enjoy broadband services with a bandwidth of four megabytes per second (Mbps) or above. The “Broadband China” project seeks to raise the country’s average broadband bandwidth capacity in urban regions to 20 Mbps by 2015, five to 10 times faster than the current level. China, the world’s No 1 telecommunications market, will have over 332 million 3G users this year, up from 232.8 million by the end of last year. By 2015, MIIT sees 450 million 3G users in the country. In Shanghai, the average internet bandwidth hit 4.70 Mbps by the end of the first quarter.

China Mobile saw its weakest profit growth in three quarters as higher costs cut gains from more users of high-speed network services. Net income rose to CNY27.9 billion in the three months through March, compared with CNY27.8 billion a year earlier. Sales rose 5.7% to CNY134.7 billion in the quarter. Ricky Lai, Hong Kong-based Analyst with Guotai Junan International Holdings, said “the heavy handset subsidies strategy in 2013, with the total estimated at CNY27 billion, will worsen its profit margins.” China Mobile’s SMS traffic actually rose about 5.5%, while mobile internet use also rose a healthy 14%. One vulnerable area was the operator’s extensive wi-fi network, where traffic actually fell about 14% during the quarter. JP Morgan predicts that the operator’s net profit will fall 3.5% for the whole of this year. “With a much bigger capital expenditure rise in 2013, China Mobile will have to experience a few years of earnings dips,” said a JP Morgan report. “The question is whether the company’s aggressive 4G investment can translate into better long-term growth. In this regard, we are more cautious than the market.” In the first quarter, China Mobile faced difficulties from “unprecedentedly intense competition” and more substitution of traditional communication businesses by new technologies and businesses, said Chairman Xi Guohua. The firm’s net profit margin “was maintained at a relatively high level of 20.7%” in the first quarter, said Xi. However, JP Morgan, quoting China Mobile’s management, said margins would be on a declining trend, and the net profit margin will have to converge to 10% to 15% at global operators in the long run. “We expect earnings to dip due to margin pressure, high capital expenditure and a dilutive 4G profit.” China Mobile’s total customer base grew by 16.01 million to 726.31 million in the first quarter from the fourth quarter last year, and its 3G customer base rose by 26.44 million to 114.37 million.