Lenovo to challenge Apple's smartphone

Lenovo Group, which is set to overtake Hewlett Packard this year as the biggest PC maker, now has its sights on the smartphone and tablet markets as it takes on Apple and Samsung Electronics in the mainland.

"We want to test the market, see the first steps towards success in China, then roll out to the rest of the world," chief executive Yang Yuanqing said. "We want to win in the smartphone area and even the TV area."

The maker of Thinkpad laptops, a business it acquired from IBM, has added tablets and phones to lessen its dependence on PCs, taking it into direct competition with Apple, the world's most valuable company.

Yang said Lenovo's brand name, product development and distribution in the mainland would give it an edge over Apple and other rivals that create devices elsewhere before selling them in the world's biggest PC and smartphone market.

Yang is not alone in that view. A China-first strategy gives Lenovo "the right balance between near-term profitability and long-term growth", said Masha Gordon, head of emerging-market equity portfolio management at Pacific Investment Management. "Lenovo is likely to leverage its global PC footprint to expand its global presence into these new areas."

Lenovo already outsells Apple's iPhone in China, where the Beijing-based company introduced its first touch-screen handset in 2010. The company's smartphone shipments outpaced its PC unit sales for the first time in the second quarter, overtaking the iPhone as well, according to researcher IDC.