2015 was challenging for Lenovo, and that’s bad news for the PC business

Things haven’t been easy for PC makers in 2015, and Lenovo has had a particularly tough time. While it has maintained its spot as the world’s largest PC manufacturer, it’s had to weather a number of storms.

In February, the company faced a wave of criticism over a piece of bloatware found on several ranges of its computers. The Superfish adware, which was pre-installed, could break the HTTPS connection on a browser to inject advertisements. That could leave users susceptible to man-in-the-middle attacks. Lenovo’s CTO said it “messed up.”

On the business end of things, it has faced a mixed picture. In November, it posted its first quarterly loss in six years. That isn’t a result of security woes, but rather from challenges in its smartphone division stemming from its Motorola acquisition in 2014. In August it let 3,200 employees go.

The China-based company is clearly focused on PCs in the future. It most recently revealed a new ThinkPad P40 Yoga, a hybrid workstation device, and announced a new deal with gaming hardware and software maker Razer to develop new ranges of gaming PCs and laptops. Yet the continuing decline of PC sales makes any gain in that segment hard-won, putting Lenovo in a corner.

And it’s not alone. All PC makers, with the possible exception of Apple, are struggling to cope as the market shrinks. The problems faced by Lenovo are a symptom of that underlying weakness.

Restoring confidence

Lenovo needs to instill confidence in its products (much like the PC business as a whole) following a couple of months of bad security press.

Lenovo and the makers of Superfish had earlier claimed that the software posed no security threat to users, but it is now flagged as a virus by Microsoft that needs to be removed. After the Superfish issue seemed to have blown over, reports surfaced in August that accused the company of re-installing bloatware in its laptops after the user removed it.

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Bill Roberson/Digital Trends

“We have learned from our experiences this year. We continue to make strides in improving the security of our pre-loads and the ways we manage and mitigate security vulnerabilities. This is central in our effort to provide cleaner and safer PCs,” a Lenovo spokesperson told Digital Trends.

The company declined to comment on the legal action that has been taken against it over Superfish.

Lenovo has found its security under more scrutiny because of its past problems.

At the end of November, the company patched another flaw. Security firm IOActive discovered two vulnerabilities that would allow an attacker to potentially gain access to administrator accounts, wrote Sofiane Talmat.

Most companies have to address these kinds of security challenges regularly, but Lenovo has found itself under more scrutiny than others over the last few months. As a result, the security community is now putting Lenovo under extra security, which may result in the discovery of issues that’d otherwise be ignored.

Lenovo currently has a security response team in place, which tackles vulnerabilities once they are discovered or brought to their attention, like the recent vulnerability discovered in the Lenovo Solution Center app.

Not alone

While Lenovo has received the most flak for its security woes, it may not be an outlier. We’ve looked at the issue of bloatware on PCs before, both from the perspectives of security and user experience, and found many manufacturers fall short. In November, Dell found itself entangled in its own security nightmare.

“Given Dell’s eRoot challenges [in November] it’ll be hard for many fingers to get pointed anymore,” says Patrick Moorhead, principal analyst at Moor Insights & Strategy.

Just this week several PC makers, including Dell and Toshiba, were also found to have installed vulnerable support software.

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Bill Roberson/Digital Trends

“Almost all of the leading vendors have had security issues, recently but none are addressing the problem in context,” says Morey Haber, VP of technology at data security firm BeyondTrust. “They are managing these security flaws like 1995, and trying to brush them under the rug with quiet disclosures and slick marketing responses. Vulnerabilities have become a fact as a part of our technology advancements, and businesses like Lenovo need to live up to them.”

Kim Titus, formerly director Samsung Mobile’s public relations in the U.S., believes the whole Superfish scandal has blown over for the most part. Rather, the company needs to continue its focus on “re-Americanizing its brand” to further its appeal.

It’s a Chinese company and will need to do so to gain more traction in the U.S., especially if it wants to stand out from others. Given the tumultuous nature of the PC business, all manufacturers will need to find new ways to appeal to different segments of their customer base.

“Lenovo needs to take a page from the playbooks written by Sony in televisions and Samsung in mobile phones by so integrating products into the U.S. culture that consumers forget their origins,” explains Titus.

On a more positive note for Lenovo, it appears to be in a good position to pull this off. “Lenovo is really the only Chinese company that has fully broken out of China into the U.S. largely because they approached the U.S. as a native vendor, not a Chinese vendor,” explains Rob Enderle, an analyst from the Enderle Group. Also, according to Lenovo’s latest filing, consolidated sales in the Americas grew some 70 percent, and accounts for about 30 percent of its total worldwide sales while China makes up 28 percent.

2016 and beyond

As we enter 2016, PC sales are likely to enter more turbulent times. An August report from IDC predicts that PC sales will have dropped by more than eight percent by the end of the year, with the market stabilizing in 2017.

It’s easy to demand greater transparency, yet that’s contradictory to the reality of sliding PC sales.

Lenovo’s rough 2015 is the result of some questionable decisions, but those decisions aren’t exclusive to the company, and in fact symptomatic of the problems faced by all PC makers. Lenovo’s decision to secure new revenue through adware was an attempt to make up for thin margins. Dell’s insecure support application, on the other hand, was an attempt to add new value with unique software.

For customers, users, and critics, it’s easy to call such actions stupid, and demand greater transparency, along with better products. Yet that dream is contradictory to the reality of sliding PC sales and falling prices. Great products are often expensive, and PC OEMs are finding it hard to convince users they should pay the price.

But all hope isn’t lost. Windows 10 is expected to lead to a rise in sales once prices settle in the coming years, at least according to Gartner. Intel is also expecting Windows 10 to lend a hand. PC sales may yet recover — but until they do, we can expect to see Lenovo’s woe repeat.

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