Lenovo Looks Ahead

The PC maker is eyeing expansion as it looks to compete with HP and Dell.

Lenovo is setting out to make a new name for itself.

By most accounts, Lenovo Group Ltd., created in May when Lenovo closed it multibillion-dollar purchase of IBMs PC division, saw its first 100 days pass by smoothly.

Despite some channel partners complaints of a shortage of its desktops, the company was able to protect its combined market share, while beginning the job of establishing its new identity—thus far its marketing has centered on its Think brands—and it even made some gains in notebook customer satisfaction against rivals Dell Inc. and Hewlett-Packard Co.

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But despite turning in a solid second quarter, in which it turned a profit and gained back the market share it lost during the first quarter, the new Lenovo has its work cut out for it.

During the coming quarters, the company must continue to protect its corporate accounts while it begins executives on its plan to entering new markets, including selling consumer PCs in the United States again—all in an effort to boost its shipments and make gains in the Dell and HP-dominated PC market.

"The long term goal [of Lenovo] is world domination. It made the investment [in IBM] because it wanted to go to number two or number one [in the worldwide PC market]. The way to do that its going to have to expand its share, big time," said Leslie Feiring, analyst with Gartner Inc.

Lenovo is already moving on that plan. However, its getting started small, with an effort to entice smaller businesses and some consumers to its ThinkPad line.

It will unveil a new multimedia-oriented, widescreen ThinkPad Z series, in September.

The line will offer models with 14-inch or 15.4-inch wide screen displays along with high-performance graphics and a full compliment of multimedia ports, including IEE 1394 port, sources familiar with Lenovos plans said.

The machines are expected to start in the $1,200 to $1,500 range.

But the company wont stop there. Its also working on an entirely new line of consumer machines, some of which it may transplant from its China operation, and a branding strategy to go with them.

Although it hasnt finalized its plans yet—it could still create a sub-brand under Lenovo for the machines—it appears to be leaning toward affixing its consumer products with the Lenovo brand name, emulating strategies such as Toyota Motor Corp.s Toyota-Lexus model.

The auto maker markets Lexus models as premium autos, which include more features and thus sell for higher prices than its Toyota models.

The Think-brand products are Lenovos equivalent of Lexus models.

Its consumer machines, which would be branded as Lenovo models, would be its Toyota-equivalent.

Next Page: A trial balloon.