Becoming profitable is only the first step in a long journey as the PC maker strives to enter the mobile industry, analysts said.
"Since Lenovo's smartphone business is starting to become profitable, it is allowing the company to invest more in product development, marketing and building distribution channels, which are key for it to build a sustainable business in the global smartphone industry," said Wang Jingwen, analyst at Canalys.
Yang said Lenovo will put more energy into developing high-end smartphones, a move that will bring the company into face-to-face competition with Samsung and Apple.
It will take longer to generate a profit in overseas smartphone markets, he said, adding that Lenovo will continue to focus on the Chinese market and does not expect overseas markets to generate a profit anytime soon.
China's major telecommunications carriers have offered subsidies to overseas brands, making it difficult for local manufacturers to explore the high-end market, Yang said.
Wang said Lenovo will continue to be one of China's leading smartphone vendors in 2013.
"Lenovo's brand awareness in China's low-tier cities, which will see strong growth in the following years, will allow Lenovo to penetrate quickly in these areas," Wang said.
The company also sells smartphones in emerging markets such as the Philippines, India and Russia, but has been unable to make a profit because of the relatively small market scale.
Lenovo should improve its branding and channel reach both in China and emerging markets, Wang said.