On a busy weekend, at an IT shop at Zhongguancun in Beijing, the salespeople for a Lenovo distributor are dressed in T-shirts with the words “IdeaPad” and “IdeaCentre” printed on the back while “Ideas Everywhere” on the front. The IdeaCentre is a desktop brand and the IdeaPad is the name of a laptop. Clearly, the word “Idea” is central to Lenovo’s latest development strategy.
In January this year, Lenovo officially launched the Idea brand products at the International Consumer Electronics Show (CES) in the US. That was followed by the Chinese launch in April. Then in mid-July, when Intel’s Centrino 2 platform hit the market, Lenovo launched 5 IdeaPad laptop models based on the new Centrino platform. Lenovo has a lot riding on these new products.
New Brand, New Market
The launch of the Idea brand has much to do with the unsatisfactory performance of Lenovo in the global consumer market. Since it acquired IBM’s PC business, Lenovo has dived into R&D and supply chain integration in a bid to create synergy between IBM’s PC business and Lenovo’s PC business in China as soon as possible. The strategy has made progress.
But while Lenovo has been immersed in integration, rivals like HP and Acer have made notable gains in the rapidly growing consumer market. They’ve secured the No. 1 and No. 3 positions in the global PC market respectively. Former No. 1 player Dell, used to have been focusing on the business segment, has been undergoing a difficult transition.
Outside of China, Lenovo has failed to capture a satisfactory share of the consumer market. Lenovo’s international transaction portfolio for individual consumers accounts for 35% of total sales, with the remaining 65% contributed by the business-oriented relationship portfolio. In the corporate market, Lenovo continues to do well with the famous Think brand. But, in the consumer market, Lenovo has only been marketing its old Lenovo brand. Attempting to move into the international consumer market with the relatively unknown Lenovo brand and older products turned out to be a bad idea. Prior to that move, Lenovo had tried to enter the overseas small and medium-sized business markets with Lenovo 3000. The strategy yielded similar results.
After several trials, Lenovo finally decided to separate its corporate and product brands and build a brand dedicated to the consumer market. In 2006, led by Deepak Advani, senior vice president and CMO, Lenovo began to design a new consumer brand, the Idea brand. Idea is similar to Think, which it’s hoped will spark consumer interest. The combination should make both brands more successful. In April of 2007, Lenovo set up an independent consumer PC unit responsible for running the Idea brand. At first, Yang Yuanqing, Chairman of Lenovo, led the department. Later, it was handed over to Senor Vice President Liu Jun, who had previously helped open up China’s consumer PC market.
The next key step was to launch a respectable Idea product. In mid-2007, Lenovo began an extensive six-month international survey of 20,000 consumers to discover the elements that would be acceptable to both Asian and western cultures. It would then incorporate these elements into the product design. The researchers found the two groups represent two extremes: Europeans pay special attention to environmental protection, and dislike gaudy stuff; Asians prefer aesthetic, fashionable, and small-sized products.
After the concept design began to take shape, Lenovo’s R&D team went to work. Lenovo’s three R&D bases around the world jointly developed the new Idea offerings. The R&D base in China focused on vogue elements; the team in Japan designed the product structure and technology; and the facility in the US was responsible for architecture and technological compatibility.
Idea inherited many of the technologies used on Think, including a keyboard that delivers a unique hand touch, integrated structural design, shock-resistance, air bag technology, fingerprint recognition, etc. It’s a sign that the R&D integration of Lenovo and the former IBM PC business had made substantial progress.
The final product test phase was far more complicated than for the products sold only in China. Idea was tested not only on the software that was often used in China, but also on the applications used in other countries. For instance, when testing the software compatibility of an IdeaPad model, Lenovo found that the model conflicted with some tax declaration applications used in the US. After repeated checks, it was learned that the software conflicted with the driver for the graphics card. To solve this problem, a task force was set up.
The development process eventually got so complicated that Lenovo was forced to delay its product release in China till the second half of last year.
Selling Ideas in China
In January this year, Lenovo introduced four Idea models-three laptops and a desktop. They were first released in America, Europe, and India. Three months later, they hit the Chinese market. So far, Idea has seen limited consumer success in China.
Although the brand has been on the market for sometime now, Idea has still not been well received in China. Of course, this has much to do with the fact that mainstream configurations of Idea were still not available in China until very recently. For example, the first three IdeaPad models launched by Lenovo (the 11-inch U110, the 15-inch Y510 and the 17-inch Y710) were designed for the international market. The smaller U110 has struck a chord with the Chinese, but they’ve been lukewarm on the other two. The lack of 13 or 14-inch models was also identified as a reason for slow IdeaPad sales in China.
Until it actually launched its 13 and 14-inch IdeaPad configurations, Lenovo could only offer Tianyi, Xuri and other “local brands” in China. At the Zhongguancun computer market, Tianyi, Xuri, Yangtian and Jiayue brand PCs still dominate the counters of Lenovo distributors. The recently launched Idea brand products still don’t get much floor space. Tier-2 and tier-3 Lenovo distributors are even less familiar with the new brand. “So far, in terms of quantity, our Idea product line only accounts for 30% of the entire consumer portfolio,” says Liu Jie, Vice President of consumer business for Lenovo’s Greater China and Russia Region.