Lenovo: Finally a Risk Taker In Intel Tie-Up 联想联手英特尔,终於肯冒险

By newsdoug on January 12, 2012

Lenovo bets on new Intel smartphone chip I have to applaud Chinese PC maker Lenovo (HKEx: 992) for its decision to be one of the first backers for a new smartphone chip developed by Intel (Nasdaq: INTC), not so much because I believe this new product will succeed but more because it shows Lenovo is finally starting to shed its image as a follower and take some intelligent risks. This is exactly the kind of thing the company needs to do more if it wants to become a true global leader, even though such risks are likely to produce some big failures, and this one is no exception. Let’s look more closely at this move, which Lenovo announced at the massive Consumer Electronics Show this week in Las Vegas. Lenovo, along with Motorola Mobility (NYSE: MMI), announced they will be the first partners to use a new chip that Intel has developed for smartphones and tablet PCs that are stealing share from the chipmaker’s traditional PC business. (English article) The current smartphone market is dominated by chipmaker ARM (London: ARM), working with companies like Qualcomm (Nasdaq: QCOM) and Broadcom (Nasdaq: BRCM). Intel has never been able to break into the market, but realizes it must do so or risk watching its PC chip business shrivel as more people use tablets and smartphones for their computing. Lenovo, which already makes smartphones but hasn’t found much success in the area, is taking what looks like a smart risk here by signing up as one of the first customers for Intel’s new chip. By making this move, it will immediately have access to Intel’s huge resources to help it develop new smartphones that could differentiate themselves in areas like computing speed and energy consumption from similar ARM-based products. And as one of Intel’s first customers, it will also receive goodwill from the US chip giant that it can use for future collaboration. On the downside, Intel has a spotty record for developing chips outside is core PC business, and in this case it is already far behind existing products. I would ultimately give this initiative less than a 50 percent chance of success, but still must congratulate Lenovo for trying to shed its image as follower and finally become a leader in new product development.

Bottom line: Lenovo’s new smartphone partnership with Intel is likely to fail in the long run, but still reflects the company’s aim to become a leader in new product development.

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