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News Analysis January=20 3, 2008, 12:01AM EST

Lenovo Thinks Beyond the ThinkPad

The rapidly ascendant PC maker is going beyond its = business-user=20 focus to the global consumer market. Coming soon: six new PCs =

by Steve Hamm =

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By buying IBM's (IBM) personal computer business three years ago, Lenovo=20 vaulted from the No. 8 position among PC makers to become the world's=20 third-biggest. Now Lenovo is taking a second bold step that will = determine=20 whether it can stay in the top ranks for the long haul. On Jan. 3, the = eve of=20 the International Consumer Electronics Show in Las Vegas, Lenovo = announced that=20 it's expanding from its focus on business users to target the consumer = market on=20 a global basis.

The Chinese-American company announced six products, three laptops = and three=20 desktop models, that will be launched in multiple countries including = the U.S.,=20 China, France, Russia, India, Australia, and Indonesia. Until now, most = of=20 Lenovo's efforts in the consumer arena have focused on China. Elsewhere, = the=20 company is best known for its ThinkPad business laptops. "This move is = very=20 important in the long run for us to meet our global aspirations," says = Deepak=20 Advani, the company's chief marketing officer. "The ThinkPad is the gold = standard in business notebooks, and it does help build the global brand, = but=20 with the consumer strategy we can turbocharge it."

Acer's PC Challenge

In addition to competing with well-known brands such as market = leaders=20 Hewlett-Packard (HPQ) and Dell (DELL), Lenovo will face a stiff challenge from Acer.=20 The aggressive Taiwanese company has been growing fast and recently = purchased=20 Gateway, a move expected to push it past Lenovo in the global rankings, = at least=20 temporarily. In the third quarter of 2007, Lenovo's share of global PC = shipments=20 came to 8.2%, edging Acer's 8.1% market share.

While Acer competes heavily on price, Lenovo is attempting to = establish a=20 reputation as a high-quality brand, accentuating innovative design with = the new=20 consumer machines. "We want to position our brand as the best engineered = products for consumers," says Craig Merrigan, Lenovo's vice-president = for=20 consumer marketing.

Among Lenovo's new models, two stand out. The IdeaPad U110 is a = 2.3-pound=20 laptop with a bright red top and a high-sheen, 11-inch screen that runs = right to=20 the edge of the lid. The U110 features a vine-like texture on the = surface of its=20 metal cover. Prices will range from $1,200 to $2,000, depending on the=20 configuration. The IdeaPad Y710 is geared toward video gamers. The = keyboard=20 features a set of special keys for game controls and an overclocking = switch to=20 provide extra processing power for fast-moving graphics. Prices for this = machine=20 start at $1,200.

All six machines also offer facial recognition-based security: When = you boot=20 up, photographic software studies your face through a built-in camera = above the=20 screen, confirming your identity before it lets you start using the = machine.=20

Lenovo is emphasizing online sales, which are growing faster than = traditional=20 retail purchases and are more profitable for PC makers. In the U.S., the = machines initially will be sold online and in stores by Micro=20 Center Online, Office Depot (ODP), and TigerDirect;=20 and online only by Best Buy (BBY) and Newegg.=20 Still, Lenovo plans on expanding the number of traditional retail = outlets it=20 sells through.

Bold Statements

Analysts briefed on Lenovo's plans give the company a thumbs-up on = strategy.=20 "This is a big step," says Roger Kay, president of market researcher = Endpoint=20 Technologies Associates. "If you're not a player in consumer these days, = you're=20 not a player." Competition is fierce, though. HP has been growing = rapidly,=20 taking advantage of its dominant position in retail. Satjiv=20 Chahil, HP's senior vice-president for global design, doesn't think = much of=20 Lenovo's entry into the retail market. "They've been spending a lot of = money on=20 it," he says.

The investment may be paying off. The early reviews of Lenovo's = consumer=20 products have been positive. J.P. Gownder, a principal analyst at = Forrester=20 Research (FORR),=20 likes the screen design on the notebooks and a uniquely shaped hinge = where the=20 laptop lid meets the body. When Gownder and others criticized the = machines at a=20 briefing last June, Lenovo scrambled to revise some of its designs, = toning down=20 some of the colors and textures. Still, Yao Yingjia, executive director = of the=20 Lenovo Innovation Design Center in Beijing, whose team designed the new = PCs,=20 says he wanted to make bold statements. "You have to take some risks," = he says.=20

Hamm is a=20 senior writer for BusinessWeek in New York.

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