Lenovo Group completed the acquisition of Lenovo Mobile Communication Technology in deal worth US$200 million in cash and shares. The mobile unit was sold off for US$100 million in 2008 in order to let the parent company focus on the personal computing market. The once unprofitable unit was turned around and, in reacquiring it, Lenovo is backtracking on its earlier strategic decision. Company executives expect mainland revenues from mobile internet to one day exceed those from the company’s core PC business. The market for mobile internet is already expected to reach the US$16 billion market by 2014.
China’s handset market is already crowded with both international and domestic competitors, but Lenovo sees the integration of internet applications and services into mobile devices as an opportunity to apply and extend the company’s core competencies in personal computing.
One of the first chances to judge the success of the acquisition will occur in May, with the rollout of Lenovo’s Android-based LePhone on China Unicom’s WCDMA network. Despite using Google’s operating system for the handset, Lenovo has incorporated news and instant messaging services from leading Chinese providers including Sina.com and Tencent. A Chinese-branded smart phone running Chinese applications may offer a competitive domestic alternative to the mid- and upper-tier Chinese mobile subscribers that have long been the captive customers of foreign brands.