With or without NEC, though, Lenovo, which only entered the cellphone market in 2010, has already done well among its Chinese peers in the local market -- including Huawei, ZTE, and Coolpad.
In the quarter that ended March 31, Strategy Analytics' data shows that Samsung sold 12.5 million smartphones in China, garnering an 18.5 percent market share, up 2.2 percent from the previous quarter. Lenovo, on the other hand, sold 7.9 million smartphones and captured 11.7 percent market share. Huawei edged Lenovo with a 12 percent market share, making Lenovo as the second largest local smartphone vendor.
Lenovo wants to enter the US market
While Lenovo's current focus is on China, India, and other Southeast Asian countries, the company harbors an ambition to establish its brand in the US market. Some observers have even suggested Lenovo's potential interest in BlackBerry.
Obviously, for Lenovo, the partnership with NEC -- which has little presence in the United States -- couldn't be much help there.
Lenovo's ambition won't stop at being a smartphone OEM. EE Times, earlier this year, reported Lenovo's plan to get into the chip design business with a special focus on smartphones and tablets.
We reported then:
The Chinese company, which has maintained a small IC design team consisting of about 10 people over the last decade, is now committed to expanding this team to about 100 engineers by the middle of this year… Lenovo will be hiring 40 engineers in Shenzhen area and 60 in Beijing.
Putting all these data points together, it's clear that neither NEC's previous prowess in SoC expertise (which now belongs to the ailing Renesas) nor the company's experience working with NTT Docomo for the Japanese market (but with no presence in the global market) is deemed important by Lenovo.
As smartphones in advanced countries begin to saturate the market, competition among handset vendors is only intensifying. NEC is losing its edge in Japan's domestic smartphone market and faces difficulties in making itself look attractive as a partner to anyone, including Lenovo.
Speaking of the global smartphone market, "The volume of new flagship smartphone releases from top original equipment manufacturers (OEM) this year has been astounding," said Wayne Lam, senior analyst for consumer and communications at HIS, in a statement.
The possible slowing growth of the iPhone and the rapid pace of competitive smartphones releases speak to the ferocious nature of the handset business, especially now as the market continues to pivot from a market dominated by lower-end handsets known as feature phones to one that is increasingly smartphone-centric.
There. So, what other options does NEC have, other than getting out of the smartphone business?