China’s Lenovo Group, best known for having purchased IBM’s PC businessin 2005, broke ground on a $796 million facility in China this month specifically to build tablets and smartphones, devices the PC giant has only dabbled with recently.
The facility won’t be operational until October 2013, so it has some time to go before we see any of its fruits. Lenovo did not say what it would make beyond “smart phones, tablets, and other mobile Internet terminal markets,” according to Yang Yuanqing, chairman and CEO of Lenovo in a statement.
Lenovo is the number two PC maker in the world and has soared to that position thanks to price competitiveness and a little help from IBM’s global services group and the IBM ThinkPad brand name. It’s only recently started making some waves in tablets and smartphones.
Market research firm IHS puts Lenovo in the top three smartphone makers in China but it’s not a major player worldwide. In tablets, IDC puts Lenovo at number four behind Apple, Samsung, and Amazon, again with most of the business in China.
In addition to the manufacturing side, this facility will employ several thousand R&D and management staff located at Wuhan, focused solely on advancing R&D in mobile Internet devices and application.
For China or Abroad?
Lenovo has an enormous brand in China and this factory might be just for its home country, notes Avi Greengart, research director for consumer devices at Current Analysis. “So the question is how big they can grow in China and then separately elsewhere. I know that Lenovo has talked about targeting North America but outside the PC world, they haven’t sold cell phones,” he said.
Lenovo’s US office did not return requests for elaboration.
Not stated in the news announcement was whether Lenovo plans to put Android or Windows on those devices. By late 2013, Windows 8/RT will be on the market and rather mature and Windows Phone will be at least one revision into “Apollo,” or Windows Phone 8, which has a lot of commonality with Windows 8/RT.
Greengart said it doesn’t matter, because the factory can load what it wants. Lenovo will decide on the competitive landscape. “The challenge for tablets is there isn’t a tablet market, there’s an iPad market. Google hasn’t been successful in penetrating the tablet market and I think it’s Google’s own fault. At the end of the day, Apple gives you 200,000 reasons to buy an iPad [a reference to the App Store] and Google gives you precious few reasons,” he said.
Microsoft is a partner with Lenovo on laptops and Greengart sees it playing a role in tablets, too. “It will certainly be interesting to see as Microsoft enters this market if they can bring a new ecosystem to bear and give consumers something to consider other than an iPad,” he said.