Lenovo May Take New IoT Device Company Public

The vendor's CEO tells Bloomberg that the new company could be worth $2 billion when it starts selling smartphones and devices April 1.

New Lenovo company

Lenovo officials throughout 2014 moved quickly to expand the company's computing capabilities beyond its market-leading PC business, spending almost $5 billion to acquire IBM's x86 server business and Motorola Mobility from Google.

In October, company officials announced it was creating a new company that will build smart devices for the Internet of things (IoT). Now executives reportedly are considering taking the new company—called Shenqi—public sometime after it opens for business April 1.

Lenovo CEO Yang Yuanqing told Bloomberg this week that the new company will sell its own branded smartphones as well as smart connected devices for the home online, rather than through carriers and retailers as Lenovo does.

"We want to build a pure Internet-oriented model," Yang told Bloomberg, adding that trying to make such a move within Lenovo would cause it to directly compete with its various channel and carrier partners. "We want to try a new way to nurture and incubate business."

Shenqi will get money from Lenovo as well as "capital markets," the CEO said, adding that the company could be worth a "couple of billion dollars" once it starts selling products. Chen Xudong, president of Lenovo’s China geography and Asia Pacific—Emerging Markets, will become the new company's CEO.

Yang would not elaborate on future fundraising plans, according to Bloomberg.

Lenovo was able to leverage its 2005 acquisition of IBM's PC business to become the world's top PC vendor, pushing past Hewlett-Packard and Dell. Now company officials are hoping to find the same success through the company's latest purchases of the IBM server unit and Motorola, with the goal of becoming a major player in all segments of computing.

The Internet of things is expected to grow rapidly. Cisco officials have said the number of connected things—from smartphones and tablets to home appliances, cars, industrial systems, light bulbs, wearable devices and surveillance cameras—will grow from 25 billion last year to more than 50 billion by 2020. IDC analysts have said they expected IoT revenues worldwide to hit $7.1 trillion by the end of the decade.

The IoT is being embraced by most tech vendors—including mobile device makers—as they look to take advantage of the growth potential in the space. Samsung has been particularly aggressive, announcing last summer that it was buying IoT startup SmartThings and helping to launch the Thread Group, an industry consortium that is aiming to develop an open standard to enable connected devices to better interoperate with each other.

In addition, at the most recent Consumer Electronics Show, Samsung officials said the company will spend $100 million to expand its IoT developer program, and that within the next five years, all of its hardware—such as TVs—will be IoT-enabled.