Lenovo Looks for a Laptop Sweet Spot

Posted by: Steve Hamm on June 23

I spent more than a year tracking Lenovo’s designers and engineers as they developed the innovative X300 laptop computer, which was released in March of 2008. This work produced a cover story for BusinessWeek and my book, The Race for Perfect. The X300 was lusted after by corporate laptop aficionados—especially the X301 version, which came out last August and had a more powerful microprocessor. The X300 was a beauty. Very thin. Very light. Solid state storage, so it was durable. But, at about $2,700 initially, the price was too high for this to be a mainstream laptop. Sales of the X300 met Lenovo’s objectives, but the goals weren’t set that high. Now Lenovo is trying to marry two laptop concepts to come up with a new one that might be appealing to corporations on a grand scale.

I got the briefing last week on the T400s. I don’t intend to go all gear-head on you (not my style, generally). This posting is about innovating around market segments and finding sweet spots.

Remember, Lenovo bought IBM's PC division primarily for the ThinkPad line of laptops and the organization's global reach. The initial integration went pretty well, especially when you consider that this was a Chinese company merged with an American company that did most of its key engineering in Japan. Quite a culture clash. But Lenovo was weak in consumer markets, so it didn't benefit much from the consumer laptop boom a couple of years back, and it has been whipsawed by the collapse of corporate computing demand. On top of that, HP, Acer, Dell have been producing some compelling laptops for corporations--pressuring ThinkPad in its core market. According to IDC, Lenovo ranked fourth in US commercial portable PC shipments in the first quarter, with a 9% market share, down from 10.4% a year earlier. (HP and Acer have been gaining share.)

The idea behind the T400s is to take some of the concepts from the X300 and meld them with ideas from the company's mainstream T Series computers. It was the brainchild of David Critchley, the T Series brand manager. He saw the opportunity to blend features of the X300 with those of the company's very popular T400 line of laptops. Engineers took the lessons they had learned in flattening out the X300 to about 3/4 inches thick and applied them to the T400s. The new computer has a 14-inch screen, which is more popular with corporations than the 13-inch screen on the X300, but it's only slightly thicker. The new machine has the same LED screen and top shell as the X300--a carbon fiber shell that eliminated the need for structural reinforcement, which would have added extra weight. The T400s weighs just 3.9 pounds, one pound lighter than the T400. The pricing will start at $1,599. Lenovo's design chief, David Hill, said, "We took the best of both worlds, the portability and design of the X300, and the performance and affordability of the T400, and made a new class of machine that's a little of both."

Hill appreciates the little design touches. For the T400s, he took an idea from the steering wheel of his BMW and made a sound volume control button on the keyboard that rocks back and forth depending on which way you want the volume to go. His sidekick Aaron Stewart placed the keys every so slightly closer together to make it harder for crumbs to fall down inside.

Will all of this care in design, engineering, and positioning pay off for Lenovo? Roger Kay, president of market research advisory firm Endpoint Technologies, predicts the new machine will sell well in corporations. Affordability is key. "People will not have to worry about the price," he said. "They'll say, 'Just give me that.'"

The economy could dampen demand, however. Worldwide PC shipments dropped 8.1% in the first quarter, says market researcher iSuppli. Notebook shipments grew 10%, but most of that growth was driven by sales of ultra-cheap netbooks. So the T400s, as swell as it is, may not get the popularity it deserves.

What fascinates me about this process is all the thinking that goes into positioning a laptop computer. We react to them aesthetically, practically, and economically--and every little tweak seems to count.

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