Lenovo Takes on Apple With `Extreme Focus' on LePad, LePhone

Lenovo Group Ltd., China’s biggest maker of personal computers, said it will put an “extreme focus” on the further development of LePad and LePhone, its answers to Apple Inc.’s iPad tablet and iPhone smartphone.

“We have an extreme focus on the innovation of LePad and LePhone because these products will dominate the future market,” Chairman Liu Chuanzhi said in an interview at the World Economic Forum in Davos. “Anyone who loses this battle will be phased out from the history of this industry.”

Lenovo, maker of Thinkpad laptops, is diversifying in a quest to boost revenue. It started selling the LePhone in China’s domestic market in May, and plans to launch the LePad by the end of this quarter, according to Liu. The iPhone is Apple’s top-selling product, accounting for 39 percent of revenue last fiscal year. The iPad, introduced in April, accounted for 17 percent of revenue last quarter.

“History has proved we are good at catching up with the market’s leaders,” Liu said. “Though Apple is winning a significant share in the Chinese market, it has not gained a clearly leading position yet. Our advantage is we know this market better.”

Apple’s iPhone is the bestselling smartphone in China with first-half shipments of more than 900,000 last year, according to industry consultants BDA China Ltd. The company will start selling the iPad 3G model in China this quarter, Shanghai Daily reported this week, citing an unidentified official at China Unicom.

Photographer: Qilai Shen/Bloomberg

Chairman Liu Chuanzhi said, “We have an extreme focus on the innovation of LePad and LePhone because these products will dominate the future market.” Close

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Photographer: Qilai Shen/Bloomberg

Chairman Liu Chuanzhi said, “We have an extreme focus on the innovation of LePad and LePhone because these products will dominate the future market.”

Demand

Cupertino, California-based Apple posted a 78 percent jump in quarterly profit in the three months ended December, helped by holiday buying of the two products.

Lenovo received 98 percent of its 2009 sales from personal computers, and less than 1 percent from mobile phones. The company had 10 percent of the world PC market in unit terms during the first nine months of last year, ranking it behind Hewlett Packard Co., Acer Inc. and Dell Inc., according to data from industry researcher IDC.

The company said today it agreed to invest $175 million to form a venture with NEC Corp. and expand in the Japanese PC market. Both companies will transfer their Japan PC assets into the venture, named Lenovo NEC Holdings BV, in which Lenovo holds a 51 percent stake.

The new venture would help Lenovo gain on Round Rock, Texas-based Dell, the third-ranked PC maker with 12.7 percent of the global share, IDC data shows.

To contact the reporter on this story: Zijing Wu in London at zwu17@bloomberg.net.

To contact the editor responsible for this story: Daniel Hauck at dhauck1@bloomberg.net.

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