Lenovo pushes new line of laptops

MORRISVILLE, N.C. -- Lenovo, the Chinese-American computer maker, is about to make its biggest push in the United States since buying IBM's PC business in 2005.

Thursday the company announced a new line of laptops geared to gamers and home users. Called IdeaPad, the machines emphasize color, design and multimedia. They go on sale this month in the United States and 14 other countries. Prices start at $799.

"In the past 2 1/2 years, we have focused on commercial markets outside of China," said Craig Merrigan, vice president of global consumer marketing. "Now we have our eyes on more ambitious growth targets, and entering the consumer business will allow us to get there."

Globally, consumers account for 40 percent of potential sales, Merrigan said.

Lenovo timed the IdeaPad introduction to coincide with its worldwide promotion and sponsorship of the 2008 Beijing Olympics. Though the company dominates the PC market in China and has expanded rapidly in India and Southeast Asia, it has struggled to gain traction in the U.S., where it has less than 1 percent of the consumer market.

Larger competitors such as HP, Dell and Apple are way ahead in the U.S. Taiwanese computer maker Acer is also pushing into the U.S. market, with low-priced machines and a more familiar name. To catch up, Lenovo needs a successful U.S. consumer brand.

"With aggressive competition, ... it will be very difficult for (Lenovo) ... to get a second chance to establish itself in a big new market," said Technology Business Research's recent report.

The worldwide consumer PC market is projected to grow nearly 10 percent a year through 2011, with the fastest growth in Asia and other emerging markets, according to technology research company IDC. U.S. growth is expected to be about half that pace, though that's still significant, given the size of the market.

Lenovo is expanding its world headquarters in Morrisville, where research and product development operations contributed to the IdeaPad line. The company's other world headquarters is in Beijing.

The IdeaPad line draws on the engineering of the older IBM ThinkPad but is priced and detailed for a mainstream audience.

Some analysts said the company's aggressive pricing could spur a price war, especially after next week's Consumer Electronics Show in Las Vegas. Lenovo and others, such as Acer, will use the industry's largest U.S. trade show to introduce new product lines.

Rob Enderle, a mobile electronics and computing analyst in San Jose, Calif., thinks that the new line is distinct from laptops now available in the United States.

IdeaPads are designed to appeal to high-end and specialty users. The metallic-blue IdeaPad Y710 has four built-in speakers and a subwoofer. It uses facial recognition so that users don't need a password. The red, weave-textured U110 weighs 2.3 pounds and is protected by an airbaglike shock-absorption system.

"They seem to have maintained the Thinkpad level of quality but are coming in with consumer-attractive prices," Enderle said.

But building a following among U.S. consumers won't be easy. "The Lenovo brand is hardly known here," Enderle said. "A big part of the effort is just making people aware they exist. They'll have to in order to move product."

That said, Lenovo is a large global company with deep pockets and the resources to stage a major attack. Company officials have been preparing for a U.S. siege for at least two years.

The company has signed sponsorship deals for sporting events such as the NBA playoffs and struck distribution deals with retail chains such as Best Buy and Circuit City.

More recently, it formed a consumer division to further penetrate U.S., European and Latin American markets. That coincided with substantial investments in distribution and marketing in the United States.

"They have massive resources," Enderle said. Based on sales worldwide, he said, Lenovo can afford to sacrifice profit margins to gain a significant share in the United States.

"They can certainly afford to buy their way into this market," Enderle said.

A big short-term challenge will be negotiating shelf space. Retailers are often reluctant to offer premium space to new products, and it's tough to get those products to move without the right space.

"It's a cart-and-horse issue, Enderle said. "That will be one of their limiting factors."

E-mail Frank Norton at frank.Norton(at)newsobserver.com

(Distributed by Scripps Howard News Service, www.scrippsnews.com.)