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China's Lenovo set for big step in U.S.

The Baltimore Sun

Lenovo, the Chinese company that bought IBM Corp.'s corporate personal computer business in 2005, is about to take another big step in America.

Lenovo plans to announce today that later this month it will start selling PCs designed for consumers in the United States and 13 other countries.

In stores and on the Internet, Lenovo initially plans to offer a lineup of three colorful, entertainment-focused notebooks that range in price from about $800 to $1,200. It plans to introduce a line of consumer desktop PCs in the United States later.

The move will expand Lenovo's reach beyond the corporate-oriented PC industry that it entered through its $1.75 billion purchase of IBM's ThinkPad and other lines.

For U.S. consumers, it ultimately could mean lower PC prices and greater selection. For U.S. computer makers - namely market leaders Hewlett-Packard Co. and Dell Inc. - it means new competition and, potentially, new troubles. Lenovo is the No. 3 computer maker worldwide, behind HP and Dell, respectively.

"It might be more of a problem for Dell, because they're just starting out in the retail business," said longtime PC industry analyst Roger Kay, president of Endpoint Technologies Associates. "[Dell] is probably only six months or so ahead of [Lenovo] ... and that's not very far ahead."

Bob Kaufman, spokesman for Texas-based Dell, said Lenovo's entry into the U.S. consumer market doesn't change his company's focus.

"We take all our competitors seriously, but our main focus is on the customer," Kaufman said.

Lenovo isn't exactly new to the consumer PC business. In its native China, it is the market leader for both consumer and business computers. The size of the Chinese market alone makes Lenovo the No. 5 consumer PC seller worldwide, according to technology research company IDC.

But up until now, Lenovo has shied away from entering the highly competitive consumer business in the United States and other countries.

"Actually, more people in the consumer space know about Lenovo than I would've thought ... but there's still a long way for us to go," Craig Merrigan, Lenovo's vice president of global consumer marketing, said in a telephone interview from the company's U.S. offices near Raleigh, N.C.

Lenovo's push into the consumer business isn't unexpected. It comes as corporate PC sales are slow and consumer PC sales continue to rise with the evolution of the Internet and home entertainment.

It "was something they had to do, first because it fulfills the promise of the [IBM] acquisition and second because the consumer market is where the growth has come from the last couple years," said IDC analyst Richard Shim.

According to IDC, the worldwide consumer PC market is projected to grow by nearly 10 percent annually through 2011.

To boost its brand recognition, Lenovo plans to launch a major marketing campaign beginning with the international Consumer Electronics Show next week in Las Vegas and culminating with its sponsorship of the 2008 Summer Olympics in its hometown of Beijing, Merrigan said. It also is hoping some distinctive features will catch consumers' eyes.

The company's three "IdeaPad" notebooks will come in red, black and blue with textured covers and "frameless" screens that range in size from 11 to 17 inches.

They'll have home theater-style surround sound systems with as many as four speakers and a subwoofer.

They'll also come standard with high-end features such as a facial recognition sign-in system that eliminates the need for log-in passwords.

Kay, the computer industry analyst, said the distinctiveness could help Lenovo overcome some of its brand awareness issues in the United States.

"They're coming in as a relative unknown outside of China - it's not going to be easy," he said.

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