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Lenovo, the world's third-largest PC maker

By Staff
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SINGAPORE, Feb 24: Lenovo Group Ltd., the world's third-largest PC maker, on Thursday unveiled a new line of models for small businesses, taking the brand outside China for the first time in a bid to grow at twice the market rate.

Lenovo, China's largest maker of personal computers, burst onto the world stage last year after it bought International Business Machines Corp.'s struggling PC business for US.25 billion.

The Lenovo 3000 notebook and desktop models, which feature built-in tools to help small and mid-sized firms reduce their information technology expenses, cost from under 0 for a desktop without a monitor to ,500 for a high-end laptop.

The new models are priced about 5-10 per cent lower than existing IBM Think PCs.

Features include simplified network connectivity for home offices, automatic downloads of critical system updates and a one-button system recovery to help users retrieve databases which have been crippled by virus attacks.

The launch marks the start of the group's push into overseas markets using the Lenovo brand. Up till now, Lenovo PCs were sold in China while the IBM Think brand was marketed internationally.

Analysts say the campaign to position Lenovo-branded PCs as a lower- to mid-tier product to complement the higher-end IBM Think models is crucial for the firm to become a global player.

Since the IBM deal was completed, Lenovo has set an ambitious target of increasing sales at twice the market rate, aiming to become the world's second-largest PC maker by unseating either Dell Inc. or Hewlett Packard Co. Ltd. -- the number one and two players respectively.

MARKET IMPACT In January, Lenovo disappointed the market with a net profit of HK5 million ( million) for the quarter ended December, after an operating loss of HK0 million for its businesses in Asia excluding greater China pulled down its overall performance.

The new PCs, to be rolled out in various Asian markets beginning Feb. 28 through March, will start adding to Lenovo's regional sales almost immediately, Lenovo Asia Pacific Vice President Andrew Sotiropolous told Reuters.

''We should start to see that impact immediately -- the improved performance will be relative, as we have one month in this quarter to sell the product and three months in the next quarter.'' But he declined to comment on whether the Asia ex-China operations would return to the black in the coming quarters.

Asked whether the new models would help stem Lenovo's recent market share losses, Sotiropolous said: ''Yes, in the context of us not doing very well in the small business segment, this product should help us expand our addressable market, which in turn should drive a stronger performance.'' Lenovo's performance in Japan -- which analysts said accounted for the bulk of the losses in Asia ex-China -- should also improve, he said.

''The 3000 range will help our execution in Japan, which is a strong notebook, individual and small business market. We think we have the product to help our business grow -- we just need to focus on execution,'' he added.

Macquarie Securities analyst Kishore Suratkal said it was critical for Lenovo to target the high-growth small business market. ''The Q4 results missed the entire growth area of the SMB (small and medium business) segment, especially in Japan, and the new models should fill that gap,'' he said.

But it could be a case of too little, too late, he added.

''This space is too crowded already -- everybody from Dell to HP to Acer is present, and Lenovo could find it very tough unless its starts cutting prices quickly.''

REUTERS

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