Tag Archives: Hewlett Packard

I’ll admit that I don’t always have the kindest words for PC giant Lenovo (HKEx: 992), which too often to me looks like a follower rather than a leader, even as it tries to steal the global PC crown from Hewlett-Packard (NYSE: HPQ) in what would certainly be a huge accomplishment for a Chinese company. But that said, I’m happy to say that for once I’m quite intrigued by the latest news that Lenovo is charging into what looks like an unexplored territory for a PC company by teaming with an operator of cloud computing services to offer broadband services specifically linked to its new series of recently launched ThinkPad computers. (English article; Chinese article) The innovative deal, which has Lenovo pairing with a cloud services operator called Macheen, allows users of many new ThinkPad computers to surf the web in the US and most major Western European markets on a plan provided directly by Lenovo. Furthermore, the plan doesn’t require any long-term contracts, meaning users can access the service whenever they want for a flat fee of about $2 per half hour or $9 per day. This kind of model looks interesting to me, as it targets a group of more budget-conscious PC users who might want to occasionally surf the web on their portable computers but wouldn’t want to pay for a separate data plan from a regular mobile wireless carrier. By partnering with another company for the plan, Lenovo is essentially entering the telecoms services sector in a relatively risk-free way, as the telecoms company, in this case Macheen, will be taking most of the risk in terms of providing all mobile Internet services. At the same time, this partnership will allow Lenovo to gain some valuable experience in the telecoms services sector, which it could potentially use in future products including not only new PCs, but also in smartphones, gaming consoles and smart TVs — all areas that Lenovo has entered in the last couple of years and areas that could become important parts of its business in the years ahead. As far as I can see, the biggest risks to the plan lie in many of the usual places, namely in execution and product design. Lenovo isn’t exactly known for its innovative product designs, so if consumers could easily ignore this new product if the new broadband plans aren’t easy to activate and use, and if the ThinkPads themselves don’t integrate the software well. What’s more, it’s also unclear to me if the market is really very big for this kind of broadband mobile plan that appears to target budget-conscious consumers who might not want to sign up for more traditional 3G or 4G data plans. For all these reasons, I would probably only peg this new initiative’s chances of success at less than 50 percent. But regardless of how this individual plan works out, I still have to commend Lenovo for trying something innovative to promote and popularize its products as it chases its ultimate goal of becoming the world’s largest maker of computing devices. At the very least, the plan will also provide it with some experience in telecoms services, which could also become an important area for hardware makers in the future.

Bottom line: Lenovo’s move into telecoms services through a broadband product marks an important step towards more innovation, even though the actual initiative is likely to fail.

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