Lenovo May be Joining the Windows Phone Effort

Leaks from a Chinese site indicate the company has something close to release. Don't sell this news short.

A Chinese news site has photos of what looks like a Windows Phone coming from Lenovo. This would mark the first foray by the Chinese PC maker into smartphones and could be a lot more significant than it first appears.

The site, called winphonexap.com, a site dedicated to all things Windows Phone in China, first carried the rumor and some pictures (a tip of the hat to WinRumors.com for picking this up) but details were sparse.

There has been some rumor of Lenovo entering the Windows Phone market for some time but never anything concrete. This phone looks like your typical chocolate bar design with rounded edges, like far too many Android phones, and a forward-facing camera for video conferencing, which means it has Windows Phone 7.5 in mind.

Now some of you may say ho-hum to this news, but don't underestimate Lenovo. In the most recent quarterly sales figures, the Chinese firm best known for having consumed IBM's PC division has rocketed to the number two position behind HP. With all the confusion HP has created, who knows, Lenovo could go to number one.

Lenovo has done this by targeting the enterprise and cutting its margins below that of even HP and Dell. As Gartner explained it to me, HP and Dell try to keep PC margins at about five percent, while Lenovo is willing to go as low as 2-3 percent for the sake of getting market share.

This has allowed Lenovo to compete on price without having to sacrifice quality and make cheap junk, which is also why Acer's position has been plummeting. They could target the enterprise with ThinkPads and undercut HP and Dell without sacrificing IBM's level of quality. Lenovo branded laptops are another story. I had one at my previous gig and… well, let's just leave it at that.

Lenovo has also spent the last five years building a considerable channel for the SMB market. They were initially using IBM's services unit but they also wanted their own thing and now that's paying off, as Lenovo is third behind HP and Dell in the SMB space.

So don't dismiss a Lenovo phone. They are now extremely well positioned to come out with a bundle for business users, ThinkPad and Phone, and they are willing to sell it cheap enough to get the sale. This could be a sleeper hit for the company.

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Copyright © 2011 IDG Communications, Inc.

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