Good afternoon, ladies and gentlemen. Welcome to the Investor Presentations of Lenovo. First, let me introduce the management with us today. They are Mr. Yang Yuanqing, Chairman and CEO, Mr. Gianfranco Lanci, Corporate President and COO, and Mr. Wong Wai Ming, our CFO. Today, we are very excited to share with you a new look and feel, the new brand of Lenovo, which will be officially introduced at Lenovo Tech World on next Thursday in Beijing.
The new brand carries the never-stand-still attitude, as you see, and the energy of Lenovo, and is designed to be digital first, social first, and dynamic. We will definitely share with you more about the new brand going forward. Without further ado, let us start our earning presentation. We will first have Yuanqing to present and followed by Wai Ming. Now may I invite Yuanqing to come on stage for his presentation. Yuanqing, please.
Thank you. Hello, everyone. It seems now it becomes a once a year event to see you in person. But I am very excited to share our performance in a historical year and discuss about our future strategy. Last quarter, we again delivered strong results. Our revenue grew 21% year-on-year, or actually, 28% if we are excluding exchange rate impact, reaching $11.3 billion. Earnings before M&A accounting charges increased 23% year-on-year to $194 million. We had a strong performance in all our businesses, led by our PC Group, which has now held the number one position for eight straight quarters. We gained share in every geo and improved margin by one point year-on-year and reached 5.5%. In smartphones, we gained more than a point of share, actually 1.2 points year-on-year, led by Motorola, which grew more than 23% year-on-year.
Although it is not as fast as the previous quarters, but it is still very decent growth. And also by rapid growth outside of China, where our volume was more than five times the previous year. Volume outside China this quarter was 56% of our total smartphone volume. In tablets, we gained more than a point of share, actually 1.3 points, and we remained number three worldwide in both smartphone and tablet. In enterprise, our legacy ThinkServer revenue grew more than 40%. System x, we just bought from IBM, revenue declined, narrowed to 5%, but the operational margin improved by 4.2 points, reaching 2.7%. So last year it was a loss business, but this year we successfully turned it around. And our ecosystem business continued to grow and now has 7 million monthly active users. Our strong quarter finished our record fiscal year.
For the fiscal year, our revenue reached a record of more than $46 billion, up 20% year-on-year. Excluding M&A accounting charges, we had a record net income of almost $1 billion, up 22% year-on-year. In the fiscal year, we shipped almost 16 million PCs to reach our all-time highest market share of 19.7% and grew at 11-point premium to the market. In mobile, with Moto joining, we achieved a record volume of 76 million. In tablets, we gained one point of share year-on-year, outgrowing the market more than 24 points. In enterprise, ThinkServer revenue grew almost 50%. System x showed the first step of success of our thorough and quick integration, with revenue stabilizing gradually and profit improved. Ecosystem business has generated 400 million users worldwide, up 300% year-on-year, and generated $167 million revenue.
Three years ago, we made the commitment to improve our operational margin of legacy business, let's say, excluding Motorola and System x, by at least one point. We have overachieved that commitment, actually increasing this number from 2% in fiscal year 2011-2012, to 3.2% in year 2014-2015. These strong results show the formula for success that I always talk about. Clear strategy, innovative products, operational excellence, and a diverse global team and culture is clearly working. Yet, we are not satisfied and have a clear strategy for growth in the year ahead. Motorola and System x integration are both on track. For both of these businesses, we are definitely confident in our strategic direction. While we also recognize we are still building a foundation for the future, it will take time for this to become additional core business for Lenovo.
But we remain confident to build our $5 billion enterprise business with a stronger profit one year after closing. And remain firm on turning Motorola around in four to six quarters after closing. Our balanced growth and acquisitions make Lenovo a significantly more diverse businesses. In products, PC has gone from more than 80% of revenue in the first half of the fiscal year to 64% in the second. Even with record PC performance, mobile and enterprise business each accounts for 25% and 9%. In geographies, China now only accounts for 32% of our total revenue. EMEA, 28%, Americas, 26%, and Asia Pacific, 14%. In the year ahead, we will continue to execute our protect and attack strategy with the updated forecast. In PCs, we will fully leverage industry consolidation, leverage innovation, and leverage our scale and efficiency to grow our share and protect our profit pool.
In enterprise, we will leverage synergies between System x and ThinkServer, and between PC and enterprise to fund the growth. We will further reduce costs, protect our leadership position in China, and expand into global data center and cloud service market. In smartphones, we will grow with our dual-brand strategy. Motorola brand will enhance its position in North America, Latin America, and Europe by significantly improving efficiency. The Lenovo brand will focus on China and growing other emerging markets. In tablets, we will drive sales globally by leading in innovation. Ecosystem, we will continue to expand Lenovo's user base and provide greater applications and user experience. To ensure better focus, we reorganized the company, combining PC and enterprise businesses to leverage the synergy in R&D, supply chain, and procurement, and opportunities in channels and customer base. Our President and COO, Gianfranco, focuses on overseeing that part of the business.
Mobile, ECS, and IoT are more interrelated and have untapped growth potential, so I am focusing more on these areas. In this Internet Plus era, Lenovo will embrace a new vision to transform from a product-centric to a customer-centric company. To do that, first, we are moving from making mostly hardware to a fusion of hardware, software, and cloud services. With our devices and our infrastructure and cloud capabilities, users can better connect with their devices, personal data, and services. The devices can better connect with networks and other devices in the most reliable, smooth, and secure way. Second, we are moving from one-time purchase to multiple touch points with customers, even if it is just individual consumer customers. This touch point will be before, during, and, more importantly, after purchase. These are bold aspirations, but we are determined and have aligned the company to work towards this direction.
Before I close, I want to mention that Lenovo will showcase its innovative products, prototypes, and the overall picture of innovation direction at the Lenovo Tech World in Beijing on May 28th. We also will reveal our new brand, our younger look and feel, more energetic and vibrant. Many Lenovo fans will be there to share our excitement. Last year was a record year for Lenovo, but we will never stand still. Now we are prepared to unlock substantial growth across our company, which is now more diverse and balanced than ever before. Thank you everyone. Now let me turn this to our CFO, Wai Ming.
Good afternoon, everybody. Thank you, Yuanqing. I will now take you through Lenovo financial and operational performances in Q4 and our fiscal year 2015. Next slide, please. Fiscal year 2015 is another record year for Lenovo. Our group revenue increased 20% year-on-year to a record high of $46.3 billion, which obviously included the two quarters of System x and five months of Motorola financial performance. If we exclude the currency impact, the group revenue will have increased 23% year-on-year. Group PTI before non-cash M&A related accounting charges was $1.139 billion, up 12% against last year. The non-cash accounting charges related to the two M&A transactions were $168 million, which include the intangible asset amortization, the imputed interest expense on the three-year promissory note issue as part of the Motorola transaction. Group PTI was $971 million, down 4%, and group net income was $829 million, up 1% year-on-year.
Group net income before the non-cash M&A related accounting charges was $997 million, up 22% year-on-year for the fiscal year, the record high level of net income in our corporate history. In addition to the non-cash accounting charges, we have also incurred approximately $197 million in M&A related cash expenses for the year. Comprised of expense, mostly the loan interest expenses, severance payment, as well as the post-merger management expenses that is included in our PTI before the non-cash M&A related accounting charges. We have provided a bridge reconciling these different financial figures in the chart after the financial summary page. We delivered a very solid performance with real drivers from the new businesses, and we continue to be on track for our commitment to drive sustainable profitability improvement. Next slide, please.
This slide gives you a more detailed view of our financial performance for the fiscal year and quarter four. The results reflected our solid growth of our legacy PC business and the two acquired businesses. Gross profit increased 32% year-on-year, with margin improved to 14.4%, driven by the higher gross margin than Motorola and System x businesses. Operating expense increased by 39% to around $5.6 billion. This increase in E2R ratio for the fiscal year, and that is primarily driven by the two acquired businesses. We recorded net other operating expenses of $137 million, mainly included the interest expenses accrued for the $1.5 billion five-year notes issued in early May last year. The imputed interest expenses on the promissory notes, as well as some factoring cost and foreign currencies expenses. The effective tax rate for the fiscal year was 13.8%.
It is lower than last year, again, due to the tax benefit associated with the two businesses we acquired. Profit for the period was $837 million, and profit attributable to equity holders was $829 million. The difference between the two profit lines was due to our joint venture partner sharing of the gain in relation to our Compal joint venture recorded in the fiscal year. in Q4, we have included a full quarter of Motorola and System x financial performances. Revenue is up 21% year-to-year to around $11.3 billion. Excluding the foreign currency impact, the group revenue would have been increased by 28%. Gross profit was up 43% year-on-year to $1.8 billion. Margin increased by 2.4 points year-on-year to 15.7%, again, with the help of the two M&A businesses. Operating profit decreased by 45% year-to-year to $127 million, due to the higher E2R of the two businesses that we acquired.
Other non-operating expenses was $23 million, mainly attributable to the increase in the bond interest. Again, the imputed interest from the promissory note and the factoring cost. If we exclude the non-cash M&A related accounting charges of $94 million for the quarter, the pre-tax income was $198 million, down 7% year-to-year, and profit attributable to equity holders was $194 million, up 23% year-on-year. The reported pre-tax income was $104 million, and the reported profit attributable to equity holders was $100 million. Basic EPS for the year, $7.77 compared to $7.88 last year. The board declare in the meeting this morning to declare a final dividend of HKD 20.5 per share. Next slide, please.
This slide actually will provide a bridge to reconcile all the different financial figures that I mentioned earlier to give you a much better view on how our performance after excluding those M&A related cash or non-cash expenses. Next slide, please. Looking at the balance sheet, the main driver for the change in our balance sheet is the inclusion of the Motorola and the System x businesses. Non-current assets were about $11.7 billion, and current assets were about $13.4 billion as of 31st of March 2015. We have net current liabilities around $1.7 billion. The change was due to, again, the inclusion of the two M&A businesses. The non-current liabilities was around $5.8 billion. Next chart, please. Looking at the cash and working capital. Operating cash flow for the year is $238 million, was net of an investment in working capital for our Motorola and System x businesses.
Both acquired businesses currently are not run on a negative cash conversion cycle basis. We are taking actions to bring both businesses to be in line with our existing business model, which is run on a negative cash conversion cycle. We will continue to drive improvement of our balance sheet by rearranging part of our short-term borrowings into long-term facilities. At the end of March, we had net borrowings of around $28 million, but that exclude the $1.5 billion promissory note that we issued to Google. The change was due to working capital and also capital expenditure. Cash conversion cycle for the fiscal year was negative 2 days, flat year-on-year. The cash conversion cycle for quarter four was + 3 days against the - 4 days same quarter last year, and - 2 days last quarters. Again, the deviation primarily driven from the two businesses we acquired. Next chart, please.
Our overall business is much more diversified. We continue to drive profit improvement from our core PC business and drive top-line growth through our mobile and enterprise group, which are our new growth engines. For the PC business, despite the challenges in Brazil, we achieved profit growth with share gain in all geographies, particularly in EMEA. For the fiscal year, our PC revenue increased 5% year-on-year to $33.3 billion, with a record high pre-tax income of $1.8 billion and pre-tax margin of 5.3%, up 1.6 points year-to-year. The group continued to leverage the industry consolidation and enhance our leadership position with better scale helping the PC profit margin. On mobile business growth, that includes our legacy phone, Lenovo phone, tablet, and our TV business, and five months of Motorola businesses. The revenue of this business group increased 71% year-on-year to $9.1 billion, driven by the inclusion of the Motorola business.
PTI recorded a loss of $370 million, and the pre-tax margin was - 4%. Our legacy smartphone business continued to see tremendous growth in markets outside of China, growing by 126% year-to-year for the fiscal year. Our smartphone business in China, however, continued to be challenging as the carrier subsidies were cut, driving shipments through carrier channel to trend down while the internet sales increased with keen competition from other players. Both factors disrupted the market and negatively affected our phone business, I think in China. Integration of Motorola was on track to turn around in four to six quarters since the deal closed. Motorola enhanced its position in its core markets, such as in Latin America, U.S., and India. In quarter three, Motorola operating result was positively impacted by the high volume show in the last two months, when we consolidated their accounts.
In quarter four, however, Motorola operation result were back to its normal full quarter run rate, and we continue to see profitability improvements. For tablets, our worldwide tablet shipment was up 26% year-on-year, with strong growth in markets outside of China. Tablet shipments outside China now represent approximately 87% of our global volume. Enterprise business. Revenue showed an increase of 4.2 times year-on-year to $2.6 billion, which include two quarters of System x businesses. Our ThinkServer business continued to show strong growth, while System x business started to show signs of stabilization during the first two quarters of integration. PTI for the combined server and storage business recorded a loss of $121 million and pre-tax margin of a - 4.6%.
We will fully leverage the synergies and Lenovo strength in the supply chain, R&D, and channel to enhance the System x competitiveness to achieve stability and future growth targets. At the same time, we will improve its efficiency and ensure that its cost structure is competitive. Our FY 2015-2016 commitment in the Enterprise Business Group is to drive $5 billion sales revenue with a good margin remains exactly the same. Next chart, please. Performance by geography. Our geographic exposure is also very balanced to support our future growth. Looking at China. Total revenue from China was down marginally year-on-year. However, profit was up 1% year-on-year. Our overall margin in China was flat year-on-year to 5.4% as China's smartphone industry challenges negatively affected our mobile business in the country. We had also invested this year to bring the Moto back to China to drive sustainable growth over time.
Our PC business continued to perform well despite the market decline, with the market share improved year-on-year by 1.5 points to 36.6% while holding up its margin well. For smartphone, we are charging back in China by continuing to expand its business through more routes to market, including online and also new channel from ShenQi, and also a broader portfolio of Lenovo and Motorola products. For Asia-Pacific, the revenue was up 6% year-on-year to about $6.6 billion in Asia-Pacific. Profit was up 1.8 times year-on-year. Our overall operating margin improved substantially by 2.8 points year-on-year to 4.6%. PC business continued to gain share and achieve record high market share. The better operational efficiency from scaling benefits helped the profitability improvement of the geography.
Motorola performed very well in the region, especially in India, which helped strong growth of the combined smartphone shipment of Asia-Pacific region to double in the fiscal year. For EMEA. EMEA, the revenue was up 34% year-on-year to about $12.8 billion, profit up 1.2 times year-on-year. Our overall margin improved by 1.2 points year-on-year to 3.2%. Our PC business continued to gain share and achieve record high market share. In smartphone, we recorded strong growth of 3.4 times year-on-year in EMEA, driven by the momentum from both Lenovo and the Motorola brand. In America, revenue was up 49% year-on-year to about $12.2 billion, largely due to the addition of the System x and the Motorola businesses. We recorded a profit of $8 million in the region, largely due to the challenges in Brazil and the ramping up of the newly acquired businesses.
For PC, we continued to observe solid growth in the PC business in North America region and achieve a record high market share with margin improvement year-on-year in the fiscal year. With the continuation of the strong shipment performance of Motorola, our smartphone shipment grew about 30 times year-on-year in the American region for the fiscal year. For enterprise, we are preparing the foundation to attack and capture more enterprise customers in the near future. However, our performance in Brazil was still impacted by the weak market environment, which resulted in weak demand as well as relatively high inventory in the market. Currency fluctuation also negatively impacted Lenovo as well as the Motorola performance despite its strong revenue growth momentum. We have been refining our business strategy in PC, and actions are in place to stabilize the Brazil business.
Proactive actions are taken to improve our performance, include simplifying our product portfolio, improving operational control and supply chain efficiency, as well as we actually have a new local leadership team in place to execute our strategy. Looking ahead, it is clear that the Internet will continue to impact the market as well as the industry. As Yuanqing just mentioned, we are now taking proactive actions to transform ourself from a product-centric to a customer-centric company, so as to actively engage customer, thus to improve the overall customer experience and operational efficiency over time. In the short term, we will continue to see the PC market will be relatively soft. We will, however, continue to leverage the ongoing consolidation trend in the PC industry to grow both share and improve profitability while scaling our operation. For the Mobile Business Group, our legacy phone business remain challenging.
With the strengthening of our online model and the launch of the new Internet startup ShenQi, we expect some initial results later in the year, although its contribution will not be significant financially in the early stages. Outside China, we will continue to drive our business as we see more opportunity in the rest of the world. We expect rest of the world growth will continue to be stronger than that in China. As a result of a difficult economic environment, I think in markets where Motorola has significant business, Motorola has to deal with significant challenges, including a significant depreciation of the local currency, foreign currency exchange control, and also imported duties on imported products. Motorola, as a result, may not be able, in the short term, to continue to grow at a significant to the market that we saw in the last few quarters.
In the meantime, in order for us to drive operational efficiency of the entire Mobile Business Group, we plan to accelerate the integration of Motorola operation into the Lenovo smartphone businesses. However, we remain confident that we can achieve breakeven in four to six quarter after the close, as we previously planned. Actions are planned to execute in the short term will only generate returns in the second half of the year. Likewise, we are very confident of our Enterprise Business targets. With System x, we will build System x into a $5 billion business with good margin, which we are actually on track.
We expect to see continuous growth in our operational profit, that is excluding the non-cash, the M&A related accounting charges that will be driven from scaling as well as operating efficiency enhancements. We are devoted to drive growth and outperforming the industry, and in turn, enhance our profitability over time. We are very confident in delivering the year-over-year profitable growth of the group in the new fiscal year. Thank you. Now we can take your questions.
We'll move to the Q & A session. May I invite Yuanqing and Gianfranco to come on stage and take a seat? In order to allow all of us, including our participant in the webcast, to be able to listen to what we said. May I ask your kindness to raise your hand and take the microphone before you ask any questions. Also, we would like to accommodate questions as many as possible. Please avoid multi-part question and try to keep it one question at a time. Please also state your name and the company name before you ask your question. May I take the first question from the floor, please? The gentleman. Yes. In the second row, please.
Yeah. Hi. This is Gokul Hariharan from JP Morgan. Just a question on the smartphone side. As Yuanqing mentioned as well, smartphone in China, you're seeing some challenges. Could you talk a little bit about what are the steps you're taking to address these challenges? Also, second question is, like Wai Ming mentioned, you're accelerating the Motorola integration back into Lenovo parent. Last time I think Yuanqing has mentioned $500 million potential cost saving target. Could you give some indications about how this cost savings is coming through, and when should we start expecting some of these benefits coming through? Thanks.
The second question is about the Motorola cost saving-
Yeah
or synergy. Yeah. So, about our smartphone business in China. Currently, the challenge is, the market is shifting from the carrier market to the open market and to the online market. So actually, carrier market or subsidy model dropped from more than 50% to now less than 30%. So, we were very strong in the carrier market. Now we need to build our strong position in the open market and in the online market. So actually, we have realized this challenge one year or even more before. So we have started to build our capability in the open market and in the online market. So actually, we launched our Lemon smartphone with JD.com. We will launch another product called the Vibe Shot. We actually showed at the MWC in Barcelona. Soon we will launch that with Tmall of Alibaba. Very soon.
We have seen some very positive results, although it is very initial. First step to success, but I think it is a good signal. We are moving faster and determined to the online, to the open market. Definitely, ShenQi is another weapon. We have worked for quite a while, so of that team. Probably they will launch another product with a different brand. More internet-related model. Very soon. For the carrier market, we still will not give up that market, but we will be more focused on the profitability. With this strategy and change, we are very confident. By the end of the year, we can have the positive profit as well recover the growth in that market. But to be frank, China market now is not as attractive as the rest of the world.
From one aspect, the growth is very limited or is declining. From other aspect, the competition is very fierce. I would say it is not reasonable. Some players just disclose their ball. And clearly tell you, "We don't want to make money." We sell at a cost. That is not the reasonable competition. That is why we pay more attention to the rest of the world. Actually, we have seen a very good result, very positive results. Outside China now accounts for 56% of our total volume last quarter. It will further grow over time, particularly with the Lenovo brand. In emerging market, we grow faster, and we make money. Like in India, in Indonesia, Southeast Asia, Middle East, Africa, Eastern Europe. Our growth is pretty dramatic, and the profit is pretty good. Actually, this is Lenovo's unique advantage.
After we acquired the Motorola business, we don't have an IP issue. That is different from most of the Chinese players. They cannot go overseas. That is our another strategy. China is still very important. We will fix that. But we should pay more attention to the rest of the world, rather than just in China. Lastly, Motorola. I think definitely. We will realize that the $500 million synergies through the procurement and some other areas. But only relying on this is not enough to turn around the business. Actually, Motorola enjoyed the faster recovery from the faster declining after Google bought them last fiscal year. They have built a strong base in U.S. and Latin America, but not somewhere else. To further grow with the Motorola brand, we will see some bottleneck.
We must take some action to help this business to build a more competitive, more solid foundation, core competence in terms of products, business model, and cost structure. Otherwise, we will not be able to deliver our commitment to turn around the business in four to six quarters. I think our next step is to have the thorough and faster integration with the Lenovo business so that we can help them to improve in these aspects, product portfolio, competitiveness, cost structure, business model.
Thank you.
That is our plan. Our commitment is still not changed. We are still firm to turn around this in four to six quarters. Actually, by now, only two to four quarters left. We understand that.
Thank you, Yuanqing. The next question, please. The gentleman at the back, please.
Hi. My name is Jean Louis. I am from Guotai Haitong. I got two questions. Firstly, on the P&L. I would say that from Q4's P&L, two things surprised me. One, the GPM was higher, perhaps by over a percentage point versus consensus. Secondly, operating expenses also pretty high. I want to know, is the OPEX thing sustainable? Should we expect higher OPEX going forward than perhaps some of the analysts have so far expecting for next year? Is the GPM also sustainable above 15%? Thank you.
GP is higher, is very easy to understand. Because both System x, so IBM server business and the Motorola business, have a high GP. That help us to drive the high GP. With E2R higher is also easy to understand because both of these business lost money. That means they have even higher E2R. But I think this is not a bad thing. This is actually a good thing for us. You can easier to understand what's next step we should attack. Definitely we need to cut the expense to make sure we can turn around the business or to make better profit. Actually, we have already taken action in the enterprise space. Gianfranco, you can share something here.
No. This way that it's easy. Yes. The margin, as Yuanqing said, is very, very easy to understand. Of course, if you take enterprise, they are running at a very different margin than PC, which is industry standard. I know that we are not different than the rest of the industry. But also our OPEX are running at a very different index than PC. And this is not industry standard, frankly speaking. We are a little bit higher than industry. What we are merging together PCG and EBG, as you have seen during Yuanqing presentation, we are looking for a lot of synergies. Synergy on the supply chain, synergy on manufacturing. We can combine supply chain. We can combine part of the manufacturing. We are combining part of the R&D because between developing a workstation or developing a tower, there is not too much difference.
We are simplifying, optimizing the product portfolio. There were some overlap. We are looking at the overall infrastructure in terms of OPEX for back end mainly. I think that within the next couple of quarters, you will see at least on enterprise, OPEX going down to industry standard, which is something in the range of 50%-60% and not the current more or less 20% we had.
Thank you. The next question
Which means that running with the same margin, we can probably deliver 3%-4% profitability, PTI.
Thank you, Yuanqing and Gianfranco. May we take the next question, please?
Hi. Thank you, management team, to take my question. My name is Arthur Lai, coming from the Citigroup. I think you already addressed a lot of update, and I also noticed that the PTI margin in the PC side actually was very high, like 5.5%, regardless the revenue actually was in the softer season. My question is, how a company achieve this high PTI margin, and should we expect this PTI margin to continue in the June quarter and the second half? I also noticed that actually India becomes a big part of the PC market. We all know that the country actually increased the tariff. So, how is the India strategy? Will we increase the manufacturing domestically? Thank you. That is my question.
Yes. On PC margin, the market is slow. I think we continue to be relatively soft. The real difference, I think, is coming from scale, in the sense that we see most of the second-tier player, let us say, really suffering. So we see the top three that they continue to be strong and maybe even stronger. But on the other side, most of the tier two players, so number, not really four, let us say five, because there is also Apple in the top four. So number five, six, and seven that are getting really weak.
Which from our side, it means that we can continue to grow revenue and we can continue to improve our scale in the sense that we do not need to add too many OPEX, if we want to increase market share. I think we spent most of last year to build up a very solid foundation in terms of PC Group and also in terms of geo. Today, we are running consumer almost everywhere without losing money, for example, but it was not true one year ago. This is why you see much better profitability than before.
Except Brazil.
Except Brazil.
Except for Brazil.
It will take another six months before we can fix Brazil, but at least we know what to do now. I think you can expect the profitability of PC will stay in that range, in the range of the 5%. We may become even a little bit more aggressive in certain area, but still maintaining the 5% PTI. We continue to see very good growth opportunity despite market condition, but simply because some players are becoming weaker and weaker. What was the other thing?
India.
India.
India.
On India, I think it is almost public, so we can talk openly. We just won the famous edu deal.
Education deal.
Education deal.
Oh.
Which is quite good.
It could be 1 million units.
For sure it's 700,000. It might become 1 million, but let's say 700,000 is guaranteed. 1 million, we are working on that. And we are becoming bigger in India in the sense that also if you see our growth in India during the last two quarters has been extremely good. In terms of manufacturing there, we are trying to understand if there is really, talking about PC, if there is really an advantage. We have a small manufacturing place there.
It's not we don't have. We have already. We just need to decide, do we want to enlarge the manufacturing place there or not? It's still not clear, also because in India sometimes it's very difficult to understand a lot of things. It's still not clear if there is really a very good advantage to manufacture in India. But on the other side, we see India as a big opportunity in terms of growth because internet penetration is still relatively small, but the population is bigger. And as I said, we just won. We will continue to see market share in India growing, more or less with the same logic, simply because it's becoming a battle between three players at the end.
Thank you. Due to the time constraint, we take one last question. Yes, the first row gentleman, please.
Thank you for taking my question. This is Pranav from AM Capital. My question is mostly on your enterprise system. So within enterprise group, probably data center demands are rising quite rapidly, especially with the cloud computing side. What is your initiative to support rising demand of data center? What type of solutions you are providing?
It is two kind of things. From one side is to develop the right product because, of course, product is very different when you talk about this kind of solution are quite different than traditional server and storage. So high density is very different than the standard traditional server and storage. We are also looking from a manufacturing point of view, what we can do in terms of manufacturing in-house. Because today, most of the big players, when you talk about this kind of segment, are ODMs. What is the strength of ODMs? Manufacturing. But if you look, we are exactly in the same position as any other ODM, so we manufacture today. A big quantity of our notebooks is manufactured in-house. A big portion of our PC is manufactured in-house. All our servers are already manufactured in-house.
We just need to strengthen these kind of things and becoming more competitive in terms of product design, which is something we are addressing, and manufacturing NVA on the other side. In terms of components, in terms of supply chain, I don't think we have any issue because we are as big as any other ODMs, probably bigger than any other ODMs there.
Thank you, management, and thank you for everyone's coming over and also listening to our webcast. I think they really miss us, don't want us to go. Thank you once again for joining us today. If you have any further questions, please contact the IR team. Thank you.