Lenovo will struggle in US smartphone market … for a while

lenovoLenovo has been talking up its move into the US smartphone market this week, as global PC sales continue to stagnate, but the analysts I spoke to are far from convinced that the Chinese hardware giant can repeat its success in the traditional computing space.

CEO Yang Yuanqing told the WSJ that the firm would be taking aim at the US mobile space within a year. You can’t argue that it doesn’t represent a “new opportunity” for growth, given that PC shipments are still falling in most markets around the world.

In Western Europe they declined by the biggest ever amount in the last quarter – down 20 per cent year-on-year – and even in the still healthy Chinese market they are only forecast to grow by 3-4 per cent this year.

So can the hardware behemoth, which recently became the world’s number one PC vendor, tap a user trend which is seeing more and more gravitate towards mobile devices instead of traditional notebooks and desktops?

Well, Gartner has forecast it will take the lead in its domestic market – the world’s biggest for smartphones – as early as this year, but the US would seem harder to crack.

“The only way Lenovo would have a way to even have a chance would be to have a key carrier support it by lining up one or more of their products in the portfolio. Even this way, I believe consumers will not necessarily see the brand as sexy,” Gartner research VP Carolina Milanesi told me.

“Lenovo’s position in the corporate PC market might give them an opportunity in the prosumer segment especially if they brought to market an Android based device with an enterprise class security and manageability feature set. Bottom line: it’s a tough job and Lenovo would be better off capturing more of the tablet market first so that they could get one step closer to consumers.”

Canalys research director Nicole Peng was not much more optimistic of its chances in the near term, telling me China sales would continue to make up the majority of its global volume.

“The competition landscape in the US smart phone market is far more challenging for new comers, with Apple and Samsung dominating over 70 per cent share,” she added. “However to start selling smart phone in the US, more importantly to gain carrier support is strategically important for Lenovo’s overall PC+ strategy globally.”

All reasonable comments and I think they’ll be true in the short term, but I wouldn’t be surprised to see Lenovo up there in the top three or five US smartphone vendors in a couple of years’ time. ZTE, with all of its problems and negative publicity in the US, has already nabbed third place, according to new stats from ITG Market Research.

With a hefty R&D team and vaulting ambition, Lenovo will be hard to ignore, even if its brand image is not exactly an enticing one for smartphone users Stateside at the moment.


China’s hacking problem: more sinned against than sinning?

hackerLast week I finished off an analysis of the China/cyber espionage stories that have been flying around in recent months, with a surprising conclusion – in many circumstances the country may well be as much a victim of attack as a perpetrator.

We are unlikely to ever find out the extent of state-sponsored cyber attacks on the US and its allies, although thanks to several high profile reports which name and shame Beijing it’s clear that the tip of the iceberg is well and truly showing.

However, we can be more clear about how secure or otherwise China’s IP address space is and make some general observations.

I spoke to several information security experts about this and they were all in agreement that China is a particularly attractive place to launch attacks from, simply because there are so many compromised PCs as well as enough bulletproof hosting firms there to use with impunity.

HKCERT senior consultant, SC Leung, explained to me how compromised computers, of bots, in China are helping cyber criminals from outside the country.

“The zombie computer, or bot, steals the data (using its IP address) and sends it back to the attacker. When tracing the compromise police can only find the bot computer IP address. The attacker can further command the bot to send the data to Dropbox or a third party forum, and then retrieved it directly or indirectly.  This long chain of investigation of different servers (probably in different jurisdictions) hampers the investigation.” 

It’s also worth mentioning that not all attacks are being carried out by external forces to compromise Chinese IP addresses which are then used as a staging point to attack other countries. China has a massive internal problem with home-grown cyber crims targeting their own – stealing data, IP, bank credentials and even blackmailing by DDoS or other means.

It’s interesting to note that a week or so after I published this story, the FT ran an interesting piece which reached the same conclusions, claiming that the government is failing to provide coherent oversight on information security matters and that the forensics industry is virtually non-existent in China.

Apart from changing these two problems, there needs to be greater user education and awareness to ensure fewer PCs are vulnerable to outside attack, and a crack down on bulletproof hosters.

At the moment, the Party seems to be happy to close down porn sites in high profile raids, willfully censor its citizens and hit out at any US accusations of cyber subterfuge, but not to get its own house in order.

Cleaning up its address space first would would surely improve China’s standing internationally and may even help foster more cross-border co-operation, rather than the relentless mud-slinging of late.


Data security incidents hit 47,000 in 2012

Last week I popped over to the Quarry Bay HQ of Verizon Business in Hong Kong to hear more about the annual Data Breach Investigations Report.

The report’s really come on since I covered it way back in 2008, and this year pulled data from an unprecedented 19 reputable sources including Scotland Yard, the US Department of Homeland Security and many more.

The Register covered the main news from the report when it was launched the week before – that China was responsible for a whopping 96 per cent of state-affiliated attacks – so I was keen to get some other APAC-relevant insight from the team.

Unfortunately there wasn’t much to be had, in fact the report itself only mentions Asia Pacific once as a break-out region, to illustrate the top 20 threat types across the whopping 47,000 security “incidents” recorded over 2012.

What this probably tells us is that methods of collecting the data at the moment are pretty non-standardised across the globe, which makes drawing any clear comparisons difficult between regions.

Another thought that occurred: it’s fairly obvious that organisations across the globe suffer from the same kinds of information security risk – whether hacktivist, financially motivated criminal or state sponsored espionage-related.

As Verizon’s HK VP Francis Yip said: “No one is immune from cyber crime. As long as you have an IP address, you are a target, no matter how long you spend online.”

In this respect, there were no startling new trends as such to pull out of the report, aside from China’s consistent and persistent appearance as number one source of state-sponsored shenanigans.

This is probably good news for under fire CISOs, now tasked not only with deflecting financially motivated cyber crime and attempts from hacktivists to take down their sites and steal credentials, but also under-the-radar information theft from APT-style attacks.

What’s also good news, is Verizon’s assertion that the cloud is no less safe than any other form of computing system, as long as IT teams make sure they carry out due diligence on providers.

“Cloud can actually be more secure, because these providers are doing it on an industrial scale with staff who know what they are doing,” argued Verizon’s APAC head of identity and privacy services, Ian Christofis.

While all this is certainly true I definitely got the impression from the briefing that many firms are still failing on the security basics.

“Could try harder” is probably a suitable report card take-away for businesses from 2012.