Lenovo enters global consumer PC market with style

China-based Lenovo is banking its "Idea" branded consumer PC move on a combination of fashion and technology, hoping to win a larger share of the PC market with flashier notebooks and features including face recognition technology.

By Suzanne Deffree, Managing Editor, News -- Electronic News, 1/3/2008

Taking on the Dells and HPs of the PC world, Lenovo today announced its entry into the global consumer PC market with the launch of a new line of IdeaPad notebook and IdeaCentre desktop PCs to complement its business-oriented ThinkPad notebooks and ThinkCentre desktops.

Beijing-based Lenovo, already a leader in the China consumer PC market and the industry’s eager 3rd place PC OEM based on worldwide shipments, is banking its consumer move on a combination of style and technology, hoping to win a larger share of the consumer PC market, some 40% of the total PC market, according to IDC.

Lenovo acquired IBM’s ThinkPad line in 2005 for $1.75 billion and launched a consumer business group in March 2007 to better capitalize on the global market.

“Our ThinkPad notebooks are well-known around the world as the best engineered computer for business -- for quality, reliability and thoughtful design,” said Liu Jun, president, Lenovo consumer business group, in a statement. “We’re now bringing Lenovo’s expertise in design and engineering to consumers with our Idea-branded PCs. We are confident we will grow our consumer business by blending innovative technologies with stylish designs to enhance the way people use technology in their personal lives.”

Responding to recent style-based moves that target consumer personality with glossy, color-cased laptops that are a far cry from the standard charcoal grey ThinkPad, Lenovo will begin offering the laptops in blue, red (pictured) or black and with smooth, weave or raised textured top covers and wide, frameless screens.

In doing so, it enters in a crowded and challenging market, pitting itself against the likes of Dell, HP, and, of course, Apple, for which such style moves encouraged record-breaking sales of Macintosh computers in 2007.  While Apple saw gains last year – gains that elevated it to the 3rd place PC OEM in the United States based on shipment – Dell saw market share losses, underperforming the overall PC market in Q3 with meager share growth of 1.5%, despite the earlier return of CEO Michael Dell and the company’s greater presence on retail shelves. Dell also reported supply chain issues in 2007 when its fashion-colored laptops experienced shipment delays because of paint problems during the critical back-to-school season.

Lenovo will further compete with Acer for consumer dollars, adding fuel to the growing rivalry between the two PC OEMs. Acer, ranked as the 4th PC OEM by worldwide shipments, has been nipping at Lenovo’s heals for several quarters now and is expected by iSuppli to overcome Lenovo in Q4 2007 rankings, based on projected notebook sales and sales in the Asia/Pacific and European regions. The Taiwan-based company in the second half of 2007 bested Lenovo with the acquisition of U.S.-based Gateway, giving it the former PC high-flyer and also Packard Bell, a leading European PC vendor that Lenovo had expressed interest in acquiring.

Like Dell, HP, and Apple, Acer has already established a global consumer presence and has PCs on retails shelves. Acer has placed itself firmly in the low-end of the price market, however, offering base laptops as inexpensive as $700. Lenovo’s Idea line will start at $799 and range as high as $1,199, offering more advanced and more entertainment-geared features. Such features include face recognition technology as a way to log into the PCs, touch sensitive controls, halo lighting, GameZone functionality, and Blu-Ray DVD drives.

Despite its challengers, the fight Lenovo faces in the PC market is a worthwhile one as it continues to see double-digit unit growth. American Technology Research analyst Doug Freedman this morning projected strong growth in 2008 for the market.
 
“We expect 2008 to be a solid year for the PC sector,” Freedman said in a research note forecasting 35% notebook unit growth of 145 million to 155 million units year over year. “We expect desktop units to continue to show modest gains, though growth in notebooks is becoming more important to the overall PC unit growth number. ... Notebook growth should continue to drive overall solid results for PC supply chain companies as the transition crosses over the 50% barrier as a percentage of units in late 2008. We view the introduction of new form factors for ultra mobile computing at attractive price points as a possible driver of upside.”

The Idea line will be initially offered in the U.S., France, Russia, South Africa, India, Australia, Hong Kong, Indonesia, Malaysia, Vietnam, Thailand, China, the Philippines, and Singapore. A trio of IdeaPad notebook PCs – the Y510, Y710 and U110 – will be sold in the U.S. via retail online sites including BestBuy.com and will use Intel Centrino processors. The Y510 and Y710 will be made available this month; the U110 is expected in March.