Lenovo plans to use Ultrabooks to surpass HP

Chinese PC maker has big plans to become the world's largest PC maker

Lenovo is working to surpass Hewlett-Packard as the top PC maker in the world and executives think pushing Ultrabooks is the way to make that happen.

"We're confident that this is going to grow our business," said Nick Reynolds, executive director for Lenovo's worldwide product launch. "Lenovo is ranked number 2 in the world overall for PC shipments. We want to take that number one position."

And Reynolds said his company plans to use its growing line of ultrabooks to unseat HP, which has long held the top spot.

That's not just lofty thinking, according to Charles King, an analyst with Pund-IT, Inc.

"It seems entirely possible," said King. "The company is moving very strongly -- really firing on all cylinders -- while HP has been in serious disarray with changes in leadership, major layoffs and a significant reorganization of its personal systems, printing and imaging groups. In other words, there likely won't be a better time to try to surpass HP than now."

HP, simply put, may be making Lenovo's job a whole lot easier by stumbling over management missteps.

For instance, former HP CEO Leo Apotheker prompted tumult and confusion last August when he announced that the company was considering the sale of its PC manufacturing business. Though HP later decided to hold onto the PC business, damage had been done.

Consumers and major corporate buyers were left wondering whether they should forgo buying from HP, while rival PC makers were reinvigorated.

Just last month, HP announced that massive layoffs are coming.

While HP has been struggling, Lenovo has been surging ahead. In 2011, the Chinese PC company rose from being the world's fourth largest PC maker to pass Acer and Dell and grab the second spot behind HP.

Lenovo in May reported that the net profit for its fiscal fourth quarter grew by 59%, going from $42 million a year earlier to $67 million during the quarter ended March 31. Now Lenovo is sharpening its focus on ultrabooks.

Reynolds told Computerworld that Lenovo expects ultrabooks to make up 20% of its portfolio by the end of this year. And that percentage should grow to 30% in 2013.

"We're really going all in with ultrabooks," he added. "We're investing heavily."

In that vein, the company today unveiled two ultrabooks -- the IdeaPad U310, which has a 13.3-in. screen, and the U410, with a 14-in. screen.

This isn't Lenovo's first foray into the ultrabook market.

The company launched its first ultrabook in October, then in January released three more -- and showed off a future hybrid model at the Consumer Electronics Show.

"They have a shot at surpassing HP, but they will have to keep up their torrid growth rate, which isn't easy or inexpensive," said Dan Olds, an analyst with The Gabriel Consulting Group. "If you extrapolate their recent growth, you can certainly make a case for them passing HP down the road."

However, Olds added that Lenovo has a lot of hard work and expense in front of it for that to happen.

"They're going to have to capture an even larger slice of their China home market and do better in developed markets, like the U.S. and Europe, to top HP's volume," Olds said. "They're going to have to sell a lot of low-priced, low-margin products in order to capture that volume. So they'll be sacrificing profitability for volume."

Patrick Moorhead, an analyst with Moor Insights & Strategy, said he expects Lenovo to have to do more than succeed with ultrabooks to catch up to and pass HP.

"Lenovo has a chance to attain the number one market share spot, particularly if they can take advantage of the organizational upheaval at HP," he added. "Ultrabooks are certainly a part of Lenovo's overall strategy, but they will need to do a lot more to catch HP.... Lenovo is an unknown in U.S. retail and they must become a player here to be more relevant and gain share."

Sharon Gaudin covers the Internet and Web 2.0, emerging technologies, and desktop and laptop chips for Computerworld. Follow Sharon on Twitter at @sgaudin, on Google+ or subscribe to Sharon's RSS feed. Her email address is sgaudin@computerworld.com.

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