Lenovo’s recent surge into profitability after the financial crisis and global recession demonstrates that Chinese brands have more than just price appeal. In what would seem to be a radical move in other parts of the world, Lenovo, the largest manufacturer of PCs in China, is taking on Apple in a war over the smartphone market. The LePhone, launched by Lenovo, is competing directly with Apple’s iPhone and is on track to beat Apple’s iPhone that dominates virtually every other market in the world.
Lenovo may suffer a drop in its profit margins as consumers push toward low-end netbooks and other products, which offer substantially lower room for profit. The devices, made popular due to their lightweight, long battery life, and relatively low costs, are a main driver of growth for the company, but force the computer maker to drop prices on other bigger laptops.
Lenovo will also launch a new tablet PC perhaps as a way to combat Apple’s newest tablet, the iPad device. The new PC was debuted earlier this year and looks to be a strong competitor in China’s domestic electronics market. The iPad has yet to make its way to China due to shortages in other parts of the world. This gives Lenovo just another competitive edge in racing to establish a foothold in another fast growing market segment.
China and Tech
Despite conquering the rest of the world’s smartphone market, Apple has experienced a tough time penetrating China’s electronic marketplace. The company, which had a running start to build up a following in China, is now selling fewer units of the iPhone than Lenovo is selling of the LePhone. This goes to show that even Apple, now the second largest electronics maker in the world, simply doesn’t understand the unique brand appeal it takes to enter into the Chinese market.
Investors can expect a bloody marketing war in which the firms battle it out for a cell phone market that is growing faster than any other in the world. And with more than 1 billion citizens, you can be sure the end winner will have no problems counting all the money it has made.