Lenovo Pursues New Markets, Channels via Its 3000 PC Line


Archived Published: 01 March 2006 ID: G00138287

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Summary

Lenovo's new notebook and desktop PCs target small businesses and consumers in the U.S. and Europe. Success depends on how well Lenovo can exploit existing distribution channels to pry market share away from competitors.

News Analysis

Event

On 23 February 2006, Lenovo announced the availability of the 3000 PC line, Lenovo's first branded PCs to be offered worldwide. The new 3000 family includes:

  • Lenovo C Series notebooks — Designed for mobile small-business professionals, Lenovo C100 notebooks feature Intel 915GM chipsets and the choice of Pentium M or Celeron M processors. (Select models will feature Intel Centrino mobile technology.) Prices start at $599.

  • Lenovo J Series desktop PCs — Targeted at small businesses and consumers, Lenovo J100 desktop PCs come with SiS661 chipsets and the choice of Pentium 4 or Celeron D processors. Lenovo J105 desktops feature AMD Socket 754 boards with AMD Sempron or Athlon processors. Prices for the J105 and J100 start at $349 and $499, respectively.

Analysis

These products spearhead Lenovo's expansion into new market segments (including small business and small office/home office), as well as into new geographies and channel relationships. Much of the transactional market — where users buy PCs one at a time or in small batches — is centered around lower price points that Think-brand products, traditionally, have been unable to reach. Lenovo's new products are an attempt to plug that gap and increase Lenovo’s shelf space within the distributors and resellers that serve small-business customers, as well as the retailers that serve high-end consumers.

The strategy, if successful, will enable Lenovo to expand its customer base in the U.S. and Europe beyond its traditional Think-brand enterprise customers. Although Lenovo already has transactional programs, such as TopSeller and Express, that serve the small and midsize market, Lenovo continues to depend heavily on IBM to distribute its Think-brand products outside China. The J-series should allow Lenovo to target additional business through resellers and retailers without increasing its dependency on IBM.

Lenovo's success in this campaign will depend on its ability to meet two major challenges through mid-2007:

  •            Establish a critical mass of new distribution partners for the new products, and increase its share of shelf space with existing partners, particularly in North America and Europe.

  •            Increase global market share by between 2 percent and 3 percent, not only against traditional competitors Dell Computer and HP, but also against strong transactional players such as eMachines in the U.S. and Acer in Europe, the Middle East and Africa.

Recommendation: Designed for transactional buyers in small businesses, the new Lenovo products are not the best fit for enterprises making midsize- or large-account purchases. The systems do not have sufficient image stability or extended model availability guarantees, nor do they offer the level of security or manageability normally associated with enterprise-class systems.

Analytical Sources: Brian Gammage and Leslie Fiering, Gartner Research

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