Lenovo predicts smartphone sales will surpass 1m

By Wang Xing (China Daily)
Updated: 2010-05-12 10:02
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Lenovo predicts smartphone sales will surpass 1m

BEIJING - Chinese computer maker Lenovo Group Ltd said on Tuesday that it expects to sell more than 1 million of its LePhone smartphones nationwide over the next 12 months, as the firm positions the device to take on Apple's iPhone.

Yang Yuanqing, chief executive of the world's fourth-largest PC maker, said the company plans to adopt a low pricing strategy to challenge Apple's popular smartphone, which has long been criticized by Chinese consumers as overpriced and lacking WiFi functions.

"If we could provide the same caliber product but sold it at about the half the price, you can tell who is going to win," said Yang, noting that he is confident that LePhone will overshadow iPhone domestically.

China Unicom Ltd, the only telecom operator supporting the iPhone's WCDMA network standard, sold 500,000 units in China since they hit stores last October, according to research firm GFK China.

But iPhone sales have been hit by unlocked handsets smuggled in from other markets.

Lenovo said on Tuesday that its latest Android-based smart phone will start shipping in China next week, with a base price of 2,899 yuan ($366), nearly the half the price of a base model iPhone.

The first version of the product will only support China Unicom's WCDMA network. But Lenovo is also working with China Mobile and China Telecom to launch products that support TD-SCDMA and CDMA2000 networks.

"It's obviously a price war," said Fang Li, an analyst at research firm Analysys International. "That reflects Lenovo's resolution to expand in the emerging mobile Internet industry."

Fang said Chinese consumers are very price sensitive. "So I'm very positive about their strategy," she added.

According to Lenovo, LePhone will be sold through Lenovo's own PC sales channels as well as 1,600 China Unicom stores.

Yang said earlier that he expects mobile Internet products will account for 10 to 20 percent of Lenovo's revenue in five years. The company also said it may launch a simplified version of LePhone in China that will be priced for the low-end market.

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Lu Yimin, president and vice-chairman of China Unicom, said LePhone is the most important product for Unicom since the company introduced Apple's iPhone to China last year. But he also noted that the two products were targeted at different consumer groups.

Last month, China Unicom announced that it would cut the price of the iPhone by about 1,000 yuan in China. That pushes the retail price of a 3G iPhone (8GB) down to 4,999 yuan.

As the world's fourth-largest PC maker, Lenovo's core business was severely impacted during the global financial crisis, as corporate customers reduced IT spending to cut costs.

But the company's business has been on the rise since last November, as demand from emerging markets picks up and a series of cost-saving measures helped negate declining sales in mature markets.