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Lenovo to Take on the Big Boys with LePhone

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Lenovo to take on the big boys with LePhone

"I am convinced that Lenovo's latest smartphone, LePhone, will be a success in the Chinese market," said Liu Chuanzhi, chairman of Lenovo Group.

The new LePhone is ready for a fight with Apple's iPhone in the Chinese market and is bound to succeed since LePhone is customized for Chinese users and has received strong support from top domestic service and content suppliers, including Baidu Inc, Alibaba Group and Tencent Inc, Liu, 66, said in an exclusive interview with China Daily.

Based on Google Inc's Android operating system, the first version of LePhone, running on the third-generation (3G) standard WCDMA, which is used by China Unicom, will be officially launched on Tuesday and available in stores from May 17.

Lenovo is also working on several versions of LePhone for China's other two 3G standards - CDMA2000 by China Telecom and homegrown TD-SCDMA by China Mobile, which will enter the market gradually, Liu, also founder of Lenovo, said.

Lenovo will also launch other models of the phone with modified functions, designs and business models after conducting large-scale surveys of market response and consumer acceptance, he added.

Spurred by a boom in 3G mobile services, China's mobile Internet users increased 120 million to 233 million at the end of 2009 year-on-year, accounting for 60.8 percent of the total Internet users around the nation, according to the latest report released by China Internet Network Information Center.

"Considering such a huge mobile Internet market, launching our mobile Internet strategy is a must for Lenovo Group," Liu said.

The mobile Internet device market will overtake traditional PCs in the next five years, said Yang Yuanqing, chief executive of Lenovo Group.

Lenovo sold its mobile phone unit to focus on its core PC business in March 2008, and then paid US$200 million to buy it back last November as part of its aim to become China's market leader in mobile Internet devices.

"LePhone's top-notched domestic content suppliers are the key 'weapon' to compete with the iPhone in the Chinese market," said Liu.

Lenovo now is working with over 500 content developers on its new application download store, in which some 200 suppliers have designed their products specifically for LePhone, according to the company.

"People can easily shop at, Alibaba Group's online auction site or watch TV programs anywhere as long as they have a LePhone in hand," Liu said. "I believe 70 percent to 80 percent of Chinese mobile phone users will love our LePhone, because it is really convenient."

However, Liu said the company does not expect the new LePhone to make a meaningful contribution to the company's profit for the next two to three years, as it has to compete with more established players.

"Lenovo's board of directors should not only provide financial support as always to the newly developed smartphone business, but also be well prepared for LePhone's return in the following two to three year," said Liu.

Rory Read, president and chief operating officer of Lenovo, said last month that mobile Internet devices will account for 10 percent to 20 percent of the company's revenue within five years, up from low-single-digit percentages currently.

Downloads of applications from its application store would make up an important portion of those revenues alongside device sales.

(China Daily May 11, 2010)