Lenovo launches second smartphone
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China Daily, August 9, 2011
Lenovo Group Ltd, China's largest personal computer maker by market share, launched its second smartphone on Monday to penetrate the emerging mobile Internet market and compete with international rivals such as Apple Inc and Research In Motion Ltd.
Last year, Lenovo released the LePhone, which was designed to compete with Apple's iPhone.
The new A60 smartphone, priced at 959 yuan ($149), is tailor-made for China's second-largest telecom company China Unicom, which is also the official partner of Apple's iPhone.
The phone is free if customers sign a two-year contract at 96 yuan a month. Lenovo and China Unicom estimated that sales of the new smartphone will reach 1 million in six months.
In May 2010, the company launched its 2,899-yuan LePhone, which China Unicom sold 145,000 units after hitting the market, to compete with Apple's 4,999-yuan iPhone4.
According to Liu Jun, senior vice-president of Lenovo and president of the company's Mobile Internet and Digital Home Business Group, the LePhone now has a 10 percent share of the middle- and high-end smartphone market.
In 2008, the company sold its mobile business to "concentrate on the PC sector" but bought it back in 2009.
According to US-based IT research company IDC, China's PC shipments reached 18.5 million units in the second quarter, exceeding the United States' 17.7 million.
Lenovo holds 12.3 percent of the global market and is the third-largest PC maker worldwide. Its sales reached $21.6 billion last year, putting it among the Fortune 500.
According to Yang Yuanqing, CEO of Lenovo, the company is not satisfied to remain in the PC market, and its aims to be on the cutting edge of the mobile Internet market.
He also announced that Lenovo will cooperate with China Unicom to provide more phones during the rest of this year.
"Apple is a great company, and it created a new business model in the mobile Internet market. However, Lenovo will diversify its product portfolio to cater to different target customers," said Liu.
According to Liu, China remains the most important market for Lenovo in the mobile Internet sector, and he thinks the company's advantages in supply chains, research and development and sales channels will allow it to compete with overseas rivals.
He also noted that the company will launch a second-generation LePad and LePhone later this year.
The iPhone4 accounts for about 80 percent of China Unicom's iPhone sales, and the California-based Apple has about a 15 percent market share in the 4,000-yuan-and-up cell phone market, according to Yu Yingtao, general manger of China Unicom's sales department.
Yu said that the market is far from saturated because China has nearly 900 million cell phone users, with 63 percent using handsets costing less than 1,000 yuan.
The carrier will place greater emphasis on other cell phones in the future, not just Apple's, Yu said.
"The growth rate of China's smartphone market will reach more than 100 percent this year and next year, while growth in the PC sector has slowed to less than 25 percent," said Hover Xiao, an analyst from IDC.
In the second quarter, Apple's sales revenue in China grew sixfold to $3.8 billion, with iPhone sales contributing more than 50 percent of the total, Xiao said. By comparison, sales of Lenovo's mobile Internet business account for less than 4 percent of the total at present.
"I think the shift to the mobile Internet market is wise for the company, as long as Lenovo can provide competitive products," Xiao said.
According to IDC, 36 million smartphones were sold in China last year, and the number is set to increase to 60 million this year.
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