INTERVIEW-Lenovo to launch tablet PC later this year

Tue Sep 7, 2010 3:03pm EDT

* Lenovo to launch tablet PC in China before year-end

* COO says still focusing on notebook, desktop PCs

* To grow smartphone biz in China before global expansion

By Ritsuko Ando

NEW YORK, Sept 7 (Reuters) - Lenovo Group (0992.HK) plans to launch a tablet computer in China later this year, joining its rivals and handset vendors chasing after the success of Apple Inc's (AAPL.O) iPad.

Chief Operating Officer Rory Read said on Tuesday that the company, the world's No. 4 PC brand, will eventually sell the tablet PCs in emerging markets and then move to more developed economies.

"We'll see stuff even before the end of the calendar year, initially in China," Read told Reuters in an interview.

A large portion of Lenovo's operations are in China, although the PC maker's headquarters are in Morrisville, North Carolina.

Lenovo plans to sell a tablet along with a "hybrid" option that comes with a separate keyboard, he said, adding that it will be priced toward the "mainstream" consumer.

Lenovo has said that the tablet PC, known internally as LePad, would run on Google Inc's (GOOG.O) Android operating system.

Read, however, said Lenovo remains focused on selling traditional laptops and desktops.

"The tablet space, you'll see it grow in terms of information consumption, but it will be a much smaller portion of the market, at least for the foreseeable future, the next 5 to 10 years," he said.

The PC maker swung back to the black in the fiscal first quarter, and research firm Gartner recently found that Lenovo had 10 percent of the global PC market in the second quarter, up from 8.2 percent a year earlier and narrowing the gap behind No. 3 player Dell, which had 12.4 percent.

"We'll introduce these new technologies. But the key for us is to continue to win in the notebook and desktop space, our bread and butter. We need to continue to extend that scale and continue to take share there," he said.

Competition in the tablet PC space is heating up and global handset vendors and PC makers including Nokia (NOK1V.HE), LG Electronics (066570.KS) and Hewlett-Packard Co (HPQ.N) have all been plotting to compete with Apple with the new form factor.

Dell Inc DELL.O said last month it was launching its new tablet device, the Dell Streak, to U.S. customers. [ID:nN10168094] Samsung Electronics (005930.KS) is also planning to launch its first tablet computer, the Galaxy Tab, later this month. [ID:nLDE6811ZD]

Winning market share from Apple may not be easy. Research firm iSuppli recently forecast that even with the launch of several new devices, the iPad would account for nearly three-quarters of worldwide tablet shipments this year, and hold at least 70 percent of the market in 2011.

Lenovo has said that it wants its tablet PC to be compatible with its LePhone smartphone, which is sold in China by China Unicom (0762.HK) and also runs on the Android operating system.

On its budding smartphone business, Read said the company is planning to eventually expand outside China, but it will take time and that the company did not have a fixed schedule.

While Lenovo would clearly be joining the smartphone race late in the game in North America and western Europe, Read said it made sense for Lenovo to focus on building its presence in China for now.

"Lenovo is clearly a leadership brand there, and if we introduce the smartphone there, and we get scale, we get a business that's of a significant size," he said.

"Then you can bring it internationally, because then you can reach the right price point, you can be more important to the carriers, the service providers, and those are the keys."

(Reporting by Ritsuko Ando; Editing by Richard Chang)

((ritsuko.ando@thomsonreuters.com; +1 646 223 6084; Reuters Messaging: ritsuko.ando.reuters.com@reuters.net))

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