The world’s No. 2 PC maker by shipments after Hewlett-Packard Co. said its world-wide PC shipments rose 44 percent in the quarter ended March 31, compared with a 5 percent industrywide increase. Its profitability has outpaced that of rivals Dell Inc. and HP as the Chinese company has targeted fast-growing emerging markets while its two rivals have revamped their businesses to move away from low-margin PC production. The global PC industry has taken a hit in recent years as users have increasingly traded their computers for smartphones and tablet computers.

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The news was reported by CNET earlier this month, with additional details, including the cost, trickling out in recent days. Our sources confirm that Microsoft will offer $15 Windows Pro 8 upgrades to those buying a new PC with Windows 7 Home Basic or higher.

Redmond has offered these kinds of coupons with the past several releases, so it is not a shocker.

But with Windows 8 coming this fall — possibly as late as November — and with current license sales slowing, and Microsoft losing share to both Macs and iPads, the upgrade program could be even more important this time around.

Redmond and the PC makers are hoping that the promise of a guaranteed and easy upgrade will convince back-to-school shoppers to stick with Windows, rather than head to the competition.

The upgrade program is important for another reason: Microsoft needs Windows 8 to get off to a fast start in order to convince developers to write new Metro-style apps that only run on Windows 8. Getting more Windows 7 users on the new operating system would help that cause.

A big change this time around is how the program will operate. In the past, Microsoft has been the driving force behind the cheap upgrades, but the company left it up to computer makers to handle the specific pricing, timing and fulfillment. With Windows 8, Microsoft will handle all of those items, sources say.

Microsoft declined to comment on its upgrade program plans.

The other piece of preparing for Windows 8 is what is taking place on the hardware side. Windows 8, with its Metro user interface, is tailor-made for touch devices, though it will also work with a keyboard and mouse.

So far, this summer’s laptop offerings are punched-up versions of the same PCs that have been on the market for months, with upgrades to Intel’s Ivy Bridge chip line, and PC makers all trying to put their stamp on the trend toward thinner, lighter laptops.

Lenovo has announced more consumer-friendly versions of its business-minded ThinkPad laptop. Hewlett-Packard, meanwhile, has expanded its Ultrabook line and has slapped the term “Sleekbooks” on another set of new laptops that fall into the ultra-thin-and-lightweight category but have innards that don’t meet Intel’s specifications for Ultrabooks. Sony’s new Ivy Bridge-equipped Vaio laptops will be made with lightweight materials, include larger displays, and offer optional accessories such as an extended battery.

But PC makers will clearly be gearing up for Windows 8 so that they can start pitching the new operating system as soon as it is ready.

This fall, some hardware makers will introduce convertible PCs that function as both tablets and laptops, as noted here, or will add things like touch sensors to existing displays, in order to bridge the two operating systems.

One company that has already announced a Windows 8 laptop is Lenovo. At the Consumer Electronics Show in January of this year, the China-based PC maker showed off the IdeaPad Yoga, a laptop with a 10-finger touchscreen and a full range of motion at the hinge so when fully folded it turns into a 13.3.-inch tablet.

Overall, one can expect a lot of Windows 8-ready machines to be part of the back-to-school lineups. But expect most PC makers to hold off on design overhauls for the Windows 8 launch.

Now, Lenovo, which bought the ThinkPad brand when it acquired IBM’s personal computer business in 2005, is stripping away some of the weight of the ThinkPad, with a new lightweight model that falls into the Ultrabook category.

The China-based PC maker is also introducing new ThinkPad X, T, W and L Series models, including the lightweight X230, and the ThinkPad X230t, a 12-inch convertible tablet that comes with a fully attached keyboard.

First, the X1 Carbon: Lenovo is claiming the featherweight title with this one, calling it the world’s lightest 14-inch professional Ultrabook. It clocks in at three pounds and, as one might expect from the name, is built with carbon fiber. It has an HD display and backlit keyboard, and is running Intel’s Ivy Bridge processors. Business users will appreciate the option to connect to 3G wireless networks via the laptop, provided that they’ve subscribed to a data plan through a carrier, for those times one needs to get work done and Wi-Fi is as unavailable as water in the desert.

While Lenovo says the laptop can be fully charged in 30 minutes, it’s unclear how long the battery charge is expected to last; and a few other details about the product — such as price and the number of built-in ports — are still unknown. The X1 Carbon Ultrabook will hit the market this summer.

Lenovo’s first entrant in the Ultrabook market, the IdeaPad U300s, which AllThingsD’s Walt Mossberg reviewed late last year, costs $1,095 and comes with a 128 gigabyte drive, 4GB of memory and Intel’s i5 processor. And at the Consumer Electronics Show in January, Lenovo showed off the $849 ThinkPad T430u Ultrabook, which is 12mm thick and weighs less than four pounds.

And then there are Lenovo’s new ThinkPad X, T, W, and L Series laptops, which also include Intel’s third-generation Core processors, Dolby audio, HD displays and ThinkPad Precision keyboards with optional backlighting. The T430s is the ThinkPad line’s lightest 14-inch (non-Ultrabook) laptop, while the T530 has a 15-inch full-HD display. But the most notable feature of these laptops is probably the addition of 4G/LTE broadband availability through Lenovo’s upcoming contract-free broadband service. The laptops will go on sale in June, and will range in price from $879 to $1,399.

A punched-up X230 ThinkPad will hit the market in June for $1,179, claiming up to 24 hours of battery life in a 12.5-inch form factor and weighing less than three pounds. This laptop also comes with 4G/LTE mobile broadband access.

If you’d rather have your X230 in tablet form, Lenovo has thought of that, too: The ThinkPad X230t has a rotating display that can be folded over to create an instant tablet. It is touchscreen enabled, comes with a stylus pen and also works with a ThinkPad laser mouse. (Lenovo has been playing with this form factor for a long time, actually. For an idea of how it works, check out this YouTube video.)

The convertible tablet (tabtop? laplet?) will start at around $1,479.

For the most part, these new entrants are still geared toward the professional market. But Tom Butler, Lenovo’s global director of product marketing, says the company is looking to appeal to consumers, too, in what Lenovo calls the “PC-plus” era. “From a ThinkPad perspective, we’re looking at the ‘consumerization’ of tech, so we’re addressing not only the IT departments but also the consumer,” he said.

Given the growing BYOD trend in corporations, it seems like a wise move. But whether workers given the option to work on their own laptops would prefer to bring in a consumer-ized Lenovo ThinkPad or a MacBook Air — or another, thinner Mac laptop reported to be on the way — is still to be seen.

Lenovo, the world’s second-largest PC maker, said in a written statement on Monday that the five-billion-yuan facility, in the central Chinese city of Wuhan, will have several thousand employees, mainly focused on smartphones, tablet computers and other mobile devices for China and global markets.

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However, some deductive reasoning suggests that it will be Lava, a little-known Indian company that Intel announced in February as one of its early customers.

Lenovo and France Telecom’s Orange also plan devices this quarter, but both of those companies have announced dates for later in the quarter. Lenovo’s first Intel phone is coming in May, while Orange’s is expected in June.

Intel is hoping to make a dent in a market that until now has been dominated by the likes of Qualcomm, Texas Instruments and Nvidia.

“We have ambitions to not be a minor player here,” CEO Paul Otellini said back in February.

Part of Intel’s strategy has been to create a near-complete reference design that aspiring players — like Lava — can use to quickly get into the smartphone game.

Intel also announced a longer-term partnership with Motorola Mobility, though it has yet to convince most big-name phone makers to adopt its chips.

We all know how that turned out. Dell first conquered the PC market, and the ultracompetitive environment it created drove several companies out of the market: IBM sold its PC business to Lenovo; Gateway sold itself to Acer; Hewlett-Packard acquired Compaq. Other lesser players are all but forgotten.

It’s as if Dell was a victim of the hyperefficient world it created. HP is now the world’s biggest PC maker, followed by China’s Lenovo, with Dell in third place on a global basis, as of last quarter.

PCs — consumer and business PCs — still amount to about half of Dell’s business. But there’s another way to look at Dell, and that’s from the point of view of its enterprise business. I learned this in a recent conversation with Steve Felice, Dell’s chief commercial officer. I also learned that the consumer PC business, for which Dell is still widely known in the U.S., amounts to about one-fifth of its business, while its enterprise lines of business, including commercial PCs, amount to 50 percent.

It’s all part of the long-term transformation that has been underway at Dell for a few years now. The company recently did three acquisitions in as many days, the most significant of which was for Wyse Technology.

That caught my attention. But first I wanted Felice’s reaction to the findings of a J.P. Morgan survey of 100 CIOs, saying that the release of Microsoft’s Windows 8 wouldn’t be much of a catalyst for PC buying at large companies.

(We had a pretty good talk, so, arbitrarily, I left in an eighth question from our exchange.)

AllThingsD: Steve, there’s a survey out from J.P. Morgan recently that says that CIOs from large companies don’t see Windows 8 as the sort of thing that would get them buying PCs again. That, to me, could be interpreted as bad news for Dell. Is it?

Felice: I don’t think so. Operating system changes have never been a catalyst, at least not in the corporate world. Consumers and small businesses take off with it right away. Corporations have rollout schedules, and they stick to them. Some of them are just starting to deploy Windows 7. They do their three-year roll-out schedules, and when it’s time they’ll go to Windows 8. About 55 percent of our business are the larger mid-sized and up public companies. The other 45 percent are small businesses and consumer. We’ll see some buying within that 45 percent. On the others, they will go on their normal schedule.

On the enterprise side, I was just with a bunch of CIOs here, and there are some very common themes about why I think they are going to spend some money. And it’s really to continue a transformation of their own infrastructure, to take advantage of virtualization and cloud computing and bigger pipes to transport information. There is a pretty common theme that there is more opportunity to get more out of assets. There is more optimism around moving away from legacy architectures and into open systems. The whole concept of being more “open to open” is there. We view that as good, because we’re the pure play when it comes to moving to open architectures.

What are the CIOs you talk to worried about these days?

Security. It’s easily in the top three concerns. We think we added to our portfolio two of the best assets out there. One is intended to tell you how to figure out what’s going on in their world. That’s what SecureWorks, a company we acquired recently, does. It analyzes your infrastructure and tells you where your threats are coming from and how to prevent them. And then we just announced the acquisition of SonicWall. They built a nice unified threat-management platform. From my viewpoint, it helps enable the movement to open. Some people are afraid to leave the proprietary world because they think it’s more secure.

Where are you on mobile? I read that you just killed a smartphone model. Where is Dell going on the mobile front?

I would characterize the last couple of years as us experimenting with what form factors and operating environments will work. The good thing is that we’ve never overextended ourselves in mobile, yet we’ve launched a lot of products, and we’ve learned a lot from them. We’ve launched tablets — 5-inch, 7-inch, 10-inch. We’ve launched them in emerging markets first, we’ve launched them in developed markets first. We’ve launched smartphones around the world. So we have an active smartphone that we just launched in China, and one in Japan. We just end-of-lifed one in the U.S., which is what I think you’re referring to. We have a road map of other products that are coming up. We are predominantly a commercial-oriented business that has some consumer business, but the lines are blurring.

What we’ve learned is to look at the consumer from the commercial side, not the other way around. Some companies who have done well in mobility are all about consumers and entertainment. And looking at the consumer as an individual, without any regard to how they might interact on the professional side of their life. Executives of any company I talk to say these devices are driving them crazy. They don’t know what’s happening to their information, how they get it back, nor how to interact with the other devices that people are bringing into the workplace. Or how to support them and control them. No one is dealing with that. So, generally, you’re going to see Dell think more broadly about the mobile ecosystem. When you next see devices from Dell, you’ll see us thinking more about the security of them, the end-to-end aspects of managing them, from the data center to the end user.

And yet what I’m hearing from a lot of companies is that they’re just adopting iPads, mainly because the bosses have them and love them. This is how Apple is penetrating the enterprise. How is Dell going to compete with that?

It’s unique, no question. And so it’s got some infatuation aspects to it. But then I talk to these customers, and because there isn’t a lot of alternatives, what they’re tolerating is pretty interesting. They say they have one of those products. Then the problems start coming out. First, the office applications don’t work very well, and they have trouble reading PowerPoint decks. And then they can’t wirelessly print easily, and some days they’re not able to get on the network at the office. And I look at that and say, they’re tolerating a lot because they like the form factor. Our conclusion is that there need to be some alternatives.

We’ve got the Dell XPS 13 Ultrabook, and we take it around and show it to customers, and invariably the decision-maker wants one. And then he says that if he had this, he never would have bothered with the tablet. So we took a consumer-oriented product and put pro support on it, and showed that to CIOs and said that if their executive team used it, they’d get the same support as they would on their Latitude product. So when it breaks, someone will come to the office and fix it, and you don’t have to go stand in line at the Apple store. Then we put image management on it. If you want a corporate image that has to be managed, we’ll do that. Institutions want thin and light devices, but they also want the options to secure and support them. The other thing that is happening, with ARM, you’ll get even more form factors.

Well, let’s talk about the PC, then. People keep talking about the decline of the PC. The research houses keep predicting market declines, and sometimes they materialize and sometimes they don’t. But even so, the numbers — at least globally — are flat to slightly up. Yet when you drill down to different regions, you see very different stories, with different countries growing like crazy. How does Dell see this right now?

This is a weighted math problem. The lowest growth rates are in the developed world, which will remain more of a replacement cycle world. The U.S. is like that because PC penetration is very high. Then you go to India and China, where it’s very low. What’s happening is that the emerging markets, where combined, they will be bigger than the developed world. And they are still growing rapidly, so the math is going to reverse itself. You’ll still see low-single-digit growth rates in the developed world, but healthy growth rates in emerging markets — but the emerging markets will be bigger. We still see double-digit growth in China. Look at Indonesia, there’s 300 million people just starting to buy PCs. As these countries industrialize and get more mature, they just need basic computing.

And how do those markets develop?

It comes back to the first thing I talked about. These countries don’t have the legacy baggage. They’ll grow, they’ll industrialize, they’ll need more infrastructure. And what will they buy? They’ll buy standard servers, storage, and open systems. This is happening in China, and its why we’re No. 1 in servers there.

Do you think people still associate Dell with the PC and don’t give it enough credit for its greater focus on the enterprise?

I’d have to say yes. Some of that is our own doing. We have this very large direct model, and we have a tendency to talk to customers one on one. So we tend not to do a lot of brand advertising. So our consumer advertising is more visible. If you ask people randomly what portion of our business is consumer, they’d say it’s more than half, but in fact it’s only about 20 percent. And if you ask people what portion of our business is servers and storage, they don’t know, but it’s more than 50 percent.

If you combine consumer and commercial PCs, how much is that?

About half is PC, and that’s global. But I think with all the acquisitions we’ve done, and a lot more customer testimonials we’re doing, the perception is changing. We’ve done some targeted testing of campaigns where we say, ‘Do you know that Dell does this?’ The perception of Dell as an enterprise provider skyrocketed. Brazil is an interesting case, because we entered the server and storage market there before the PC market. That’s because the only way to really be successful in Brazil with PCs is to have your own manufacturing there, because of the stiff tariffs. So in Brazil, Dell is thought of as an enterprise company. You’ll see more of a commitment this year to do more brand-oriented advertising around the enterprise.

Dell’s earnings were 51 cents and missed the consensus of analysts by a penny; the company also said that revenue would decline by 7 percent in the current quarter. In a note to clients today, Shaw Wu of Sterne Agee dropped his rating to “underperform,” the equivalent of a “sell,” arguing that Dell’s PC business continues to suffer at the competitive hands of Apple, Acer and rejuvenated Hewlett-Packard. “We are concerned with the company’s longer-term fundamental position and may face more difficulty making further operational improvements,” Wu wrote.

Richard Kugele, of Needham and Co. in New York, downgraded Dell to a “hold” from a “buy.” Rich Gardner of Citigroup also cut his rating to “hold” and dropped his target price to $19 from $20, citing declining prospects for improvements to Dell’s gross margin in the current quarter.

But the chorus of analysts wasn’t all negative. Chris Whitmore of Deutsche Bank, who last week suggested that, all things considered, Dell’s results might turn out “pretty good,” saw it differently. He blamed the ongoing shortage of hard drives brought on by last year’s flooding in Thailand and weak public sector buying, and still finds Dell attractive. The shortage, he says, was the primary reason that Dell’s gross margins — which came in at 21.7 percent — missed estimates. “Gross margins were light due to negative hard drive impact — shortages hampered the ability to sell richer high-end systems — and soft public sector results,” Whitmore wrote in a note to clients today. He maintained his “buy” rating.

Brian Marshall of ISI maintained his “neutral” rating. He wrote in a note today that Dell’s plan of shifting its revenue base away from consumer and business PCs and toward higher-value enterprise IT, software and services is going to take years. “We believe changing the composition of a $60 billion revenue base is non-trivial and takes years not quarters to successfully navigate. [We're] still scratching our heads on how earnings per share grows in 2012. … In the face of flat revenues, declining gross margins and continued operational expense growth, we struggle on how EPS will be up in 2012. We like the plan, just not the set-up.”

(Michael Dell photo by Asa Mathat)

“2012 will be the year when we deliver the proof that yes, we are there,” Intel general manager Hermann Eul told AllThingsD in an interview last week at the company’s Santa Clara, Calif., headquarters.

At the Consumer Electronics Show in January, Intel announced a reference design for phone makers as well as initial deals with Motorola and Lenovo. The company hopes to build on those by announcing new names and technologies in Barcelona next week.

This year may be devoted to getting in the game, but Eul said Intel’s ambitions extend well beyond just being one of several players.

“It will take us maybe a year or two,” Eul said. “We can make things work that nobody has thought of. That is our clear target. It is not about playing a me-too.”

Intel’s first foray is in the high-end Android space, but the company eventually hopes to be a serious contender throughout the smartphone market.

The biggest challenge, Eul said, has been just getting the company to think differently when it comes to the mobile market.

“Change is always hard for human beings,” Eul said. “Change is harder for people that are successful, and Intel is an ultra-successful company.”

But Eul said he has been impressed with Intel’s dedication as well as its willingness to put outsiders in charge of such key businesses. Eul joined Intel in February 2011, when the company acquired the former Infineon communications chip business.

When Eul walks the corridors of Intel or sits in meetings, people often talk about the many years or decades they have been at the company.

“I can only respond in months, not in years,” he said. “This is such an important part of business for Intel, and Intel has put this in the hands of people not even a year with the company.”

Eul’s unit, which is co-run with former Apple and Palm executive Mike Bell, is responsible not only for the chips that go in Android phones and tablets, but also those that will power Windows 8 tablets.

For Eul personally, the hardest thing about the shift has been the move to Silicon Valley and giving up the unlimited speed of the Autobahn in his native Germany.

“I have always enjoyed things that go fast,” said Eul, who also enjoys skiing and wakeboarding. These days, though, he is busy enough trying to move fast in the chip business, even selling off a beloved motorcycle.

“That was painful,” he said, but added, “I recognize my life does not leave me time for my motorcycle.”

That said, the steaks here are better, so he’s learning to adjust.

You might also remember that a couple of those laptops managed to stand out from the crowd — including Hewlett-Packard’s Envy Spectre 14, which goes on sale today.

Showgoers were abuzz about the glossy, Gorilla Glass-coated Spectre — despite the fact that at almost four pounds, it weighs slightly more than some other ultra-thin, Intel-driven Ultrabooks. At $1,399, it’s 20mm thin with a 14-inch screen, supports up to 256 gigabytes of storage and boasts up to nine and half hours of battery life. It also has a backlit keyboard and “proximity sensors” that light up when a user is approaching the laptop and, naturally, it has HP’s Beats Audio built in.

Another notable feature is that it incorporates near field communication technology, like the kind we’ve been seeing in mobile phones for quick, one-tap payments. HP says that the NFC tech in the Spectre, which is built into the left side of the palm-rest area, will be compatible with NFC-enabled Android phones.

So, how will it work, exactly?

After downloading the HP Touch to Share app from the Android Market, Spectre owners that have an NFC-enabled Android phone will be able to transfer URLs from the Android phone to the Spectre using NFC. For example, if you’re browsing the Web on your phone, you can then tap your screen and transfer that page to the laptop’s Web browser.

You can’t currently share photos, music or other media this way, an HP spokesperson confirmed. And while NFC is often associated with e-commerce, that’s not the usage we’re talking about here. (Since the laptop isn’t a payment terminal, you can’t, for example, browse Amazon.com, see something you’d like to buy, open up a wallet app on your phone and tap the screen with your phone to pay.) But it is a way for smartphones to “speak to” the laptop without using wires or cloud apps.

The NFC market for mobile is expected to grow dramatically over the next few years, with IHS iSuppli forecasting 544.7 million NFC-equipped cellphones to be shipped by 2015 (from 93.2 million last year); it’s likely that we’ll see this tech coming to more devices outside of mobile phones and tablets.

Nintendo, for one, recently said it plans to bring NFC to its long-awaited Wii successor, where it will be used to transfer gaming data.

So HP and Lenovo have added some features to their Ultrabooks to set them apart from all the ultra-noise.

Lenovo's IdeaPad Yoga

The Lenovo IdeaPad Yoga is named as such because of its flexibility. The 10-finger touchscreen has a full range of motion at the hinge, so when fully folded, the laptop turns into a 13.3.-inch tablet. And it can be propped up in tent mode — or, in this case, downward dog. I could see this being useful for entertainment viewing at home, as well as in small spaces, such as on an airplane.

Other laptops have shown this range of motion before — remember the Dell Inspiron Duo? — but adding this feature to a super-slim, touchscreen Windows 8 laptop is a nice touch.

The Yoga’s cover is solid aluminium; it measures 16.9mm thick and weighs 3.1 pounds. It is, of course, powered by an Intel Core processor, with 8 gigabytes of RAM and a 256GB solid-state drive. Lenovo claims the battery lasts up to eight hours.

Since the IdeaPad Yoga runs the upcoming Windows 8 operating system, the laptop likely won’t be available until the second half of the year. A representative for Lenovo said the company hopes to price it around $1,300.

Gorilla Glass is what makes the HP Envy Spectre 14 stand out. The ultra-thin, chemically strengthened material is what coats the exterior and the wrist rest of this laptop, giving it a sleek, reflective look — albeit one that needs to be wiped with a cloth pretty frequently.

HP's Envy Spectre 14

Yesterday at CES, someone lamented to me, regarding the Envy Spectre 14, “But it’s so heavy.” Weighing in at almost four pounds, the Spectre is a bit heavier than other Ultrabooks, but for comparison’s sake, the 13-inch version of the “regular” HP Envy notebook is just about the same, at 3.68 pounds.

The Spectre is 20mm thin, has a 14-inch screen and Intel Core processors, and supports up to 256GB of storage. It also boasts nine hours of battery life, versus Lenovo’s eight. The Spectre also has a backlit keyboard and proximity sensors which detect when a user is approaching the laptop and light up the keys in advance. And it has HP’s Beats Audio built in.

Another interesting feature of the Spectre is that it’s NFC-enabled; theoretically, users can share data from an NFC smartphone by tapping the phone against the Spectre.

The HP Envy Spectre is expected to launch in early February, and will cost around $1,399.

Neither of these Ultrabooks have DVD slots, but the HP Envy Spectre 14 has an expandable Ethernet port, USB 3.0, HDMI and Mini DisplayPort, while the IdeaPad Yoga has USB 2.0 and 3.0 ports, an HDMI port and an SD card slot.

A fun side note about the HP Envy Spectre 14: A company representative says HP actually first displayed a prototype of this Ultrabook last fall, during New York Fashion Week. But it was a “bejeweled” version, with Swarovski crystal designs by Marchesa, and fashion-focused reporters barely batted an eye at the thing. Who knew they were missing one of this season’s biggest CES trends?

(Images courtesy of Blogeee/Flickr)

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The New York Times published something of an exit interview with Palmisano over the weekend. It read a bit like a victory lap, and that’s not undeserved. The record books will show that IBM shares during the Palmisano era (2003-2011) rose by 125 percent; sales grew from $81 billion in 2002 to an expected $107 billion; and annual profits on a per-share basis went from $3.07 to a consensus forecast of $13.38.

But it got me to thinking about one of the highlights of the Palmisano era; one that generated a great deal of attention at the time: IBM’s decision to sell its personal computer division to Lenovo, the Chinese PC maker. It was a relatively small deal, worth less than $2 billion at the time, but it was a controversial move. Despite the fact that IBM wasn’t making much money on the business, IBM PCs, especially its ThinkPad line of notebooks, were generally considered to be pretty good.

Nearly seven years later, it’s worth noting that Lenovo is now the world’s second-largest PC vendor, behind Hewlett-Packard, having vaulted past Dell earlier this year, according to the market research firm IDC. It’s also worth noting that Lenovo is in fifth place in the U.S., behind HP, Dell, Apple and Toshiba, in that order.

IBM initially owned 15 percent of Lenovo and maintained a stake in that company until February of this year, when it sold its remaining 4.3 percent shares at a profit of more than a quarter-billion dollars.

Lenovo’s biggest shareholder is Legend Holdings, of which 36 percent is owned by the Chinese Academy of Sciences, a.k.a. CAS Holdings, a state-controlled entity. The state has pared back its stake, though: When the IBM-Lenovo deal was announced in 2005, Lenovo was 57 percent state-owned.

There was a lot of natural controversy, and even national security concerns in 2005, about selling so red-blooded an American product as the IBM PC to China. But there was also a solid business case to consider. The PC business was a drag on earnings because of downward price pressure exerted by Dell and all the others, and it wasn’t even leading the market, as was the case with Hewlett-Packard, which engaged in some very public contemplation about spinning off its own PC division.

But there was also a potential strategic benefit, which Michael Useem, a professor a the University of Pennsylvania’s Wharton School of Management, pointed out at the time: Making friends with China.

By selling an underperforming asset to a buyer willing to take it and run with it, IBM got solid access to the exploding Chinese market. In paraphrased remarks to the Times, Palmisano concedes the point:

Palmisano says he deflected overtures from Dell and private equity firms, preferring the sale to a company in China for strategic reasons: the Chinese government wants its corporations to expand globally, and by aiding that national goal, IBM enhanced its stature in the lucrative Chinese market, where the government still steers business.

So how has that worked out? It’s a little hard to tell from reading Big Blue’s Byzantine financial statements. In fiscal 2005, the year the deal closed, IBM reported $18.6 billion, or about 20 percent of revenue, came from the Asia-Pacific region, including China.

And though it declined to provide specific dollar amounts, it said that year that sales in China had dropped by 19 percent, but after after stripping out the PC division, would have grown by 8 percent.

For the first nine months of fiscal 2011, IBM reported that the Asia-Pacific region accounted for exactly the same dollar figure — $18.6 billion — amounting to 24 percent of its overall sales of $77.4 billion, and there’s still a quarter to go. That would put Asia on track to account for a little less than a quarter of IBM’s revenue.

In its earnings statement, IBM also makes a point of calling attention to what it calls “growth markets,” which are generally the BRIC countries — Brazil, Russia, India and China. These markets combined for 23 percent of sales in IBM’s most recent quarter.

This is about as close to understanding the size of IBM’s business in China as we’re going to get. On balance, it looks to have been a positive move, especially when you consider that if IBM had kept its PC division, it would have likely only gotten smaller and become more of a profit drag on a company that’s increasingly focused on high-margin businesses like services and consulting.

Nor can we judge by IBM’s headcount. Globally, as of the publication of its last annual report, IBM employed 426,751 people. But it has stopped providing a geographical breakdown. A report in the Times of India in 2010, mentioned by The Wall Street Journal, suggested that Big Blue’s headcount in India might be as high as 130,000; which, if true, would make it one of that country’s top 10 employers.

There is no question that IBM’s presence in China has grown. You can tell by the press releases. There was for example, a new IBM Research lab in Shanghai in 2008, and another in 2010. Just last month, IBM announced that it had closed a significant IT deal for a major health-care provider in Hong Kong, and another with a Chinese province to improve the safety of pork (which included a food-safety video I embedded below).

For better or worse, Palmisano will be remembered as the man who traded PCs for access to China. On balance, it seems to have been a good trade, but the jury is still out.

Tomorrow is the first business day of IBM’s Rometty era. Assuming she retires at age 60, a well-established IBM tradition, she’ll have about six years to make her mark. One wonders what she’ll be remembered for most.

If you envy Apple’s sleek, speedy MacBook Air laptop, and yearn for something like it that comes with the Microsoft Windows operating system, your wish has been granted. It’s a new type of Windows laptop called Ultrabook. A handful already are available, and more are likely to arrive in the new year.

The Ultrabook concept, which is being driven by giant chipmaker Intel, is governed by a set of specs covering everything from thinness to battery life to start-up times. But it is basically an effort to emulate the MacBook Air, which has been a hot product in a challenging market despite selling for double what some bulkier, but capable, Windows laptops fetch. (Apple doesn’t disclose sales of specific Mac models.)

Ironically, the MacBook Air, which came out in 2008 and now starts at $999, uses the same Intel processors Ultrabooks do, and can, if its owner wishes, run Windows capably along with the Mac operating system. But it now will have much more competition.

The Lenovo IdeaPad U300s, with a sturdy aluminum body, has a superb keyboard and roomy touch pad.

I’ve been testing a couple of the new Ultrabooks, from Lenovo and Toshiba, to get a feel for the category, and I’m a fan. I love the idea of a machine that combines low weight with good speed and battery life, yet doesn’t compromise on keyboard and screen size.

I found some drawbacks to both machines, and to Ultrabooks in general. For instance, like the Apple, they lack internal DVD drives and removable batteries, things that will bother some folks. And, at least for now, the Ultrabooks mostly tend to cluster at around $1,000, which rules them out for shoppers on a tight budget. But, overall, I think the advent of the Ultrabook is a good thing for consumers.

In general, I preferred the Lenovo, but the Toshiba has some advantages as well, and you won’t go wrong with either. In my tests, neither did as well as the Apple in such measures as battery life or start times. But both cost less than the comparable Apple model.

Toshiba’s Portege Z835 is lighter and has more ports, including an Ethernet port, than the comparable Lenovo IdeaPad or MacBook Air.

The idea behind the Ultrabook is to make a light, thin laptop that has a full-size screen and keyboard—unlike a cramped netbook—yet also gets strong battery life, starts up and resumes quickly, and is powerful enough to handle a wide variety of common consumer tasks. It is meant to be good enough to be your main computer, but it isn’t aimed at those who need extra horsepower for things like hard-core gaming.

To be clear, there have been thin and light Windows laptops for many years, but these machines have typically been so expensive that few people could buy them, and they often had poor battery life and other serious compromises.

I tested the Lenovo IdeaPad U300s and the Toshiba Portege Z830, and also compared them with the latest, comparable MacBook Air. Both have 13-inch screens, are made of metal, weigh under three pounds, and use a solid-state drive—storage chips—instead of a hard disk. This improves speed, reliability and battery life, but limits storage capacity.

The Lenovo starts at $1,095 with a 128 gigabyte drive, 4 GB of memory, and Intel’s mid-range i5 processor. The Toshiba starts at around $900 for a model with the same specs except for the processor, which is a less powerful chip called an i3. However, both Toshiba and Best Buy have recently put this machine on sale, and I found it on Best Buy’s website for $700.

By contrast, the 13-inch MacBook Air with the same amount of solid-state storage and memory, and the i5 processor, costs $1,299.

Beyond their price and processor differences, I found each machine had its strengths and weaknesses.

The Toshiba weighs just 2.47 pounds, versus 2.91 for the Lenovo and 2.96 for the Apple. It also boasts the most ports, including three USB ports versus two for the others and an Ethernet port the others lack. But I found its magnesium body felt more fragile than the other two, which are aluminum and sturdier.

I also disliked the fact that on Toshiba’s keyboard, using the keys for common things like brightness and muting required you to hold down a second function key. And the Toshiba came in last among the three in my tests of battery life, cold start-up time and reboot time. Plus, Toshiba has pre-loaded an annoying Best Buy promotional app that pops up at launch.

The Lenovo feels sturdy and has a keyboard I found superb, and a roomy touch pad. Unlike the other two, it isn’t tapered at the edges, and my test unit sported an orange color, though it also comes in gray. Also, like the Apple, but unlike the Toshiba, Lenovo offers a roomier, 256 GB solid-state drive for extra money.

However, the Lenovo froze once during my tests; the others didn’t. And, unlike the others, it lacks a slot for memory cards.

Both Ultrabooks did fine at all the common tasks I threw at them. But their screen resolution is less than the Mac’s, meaning less material can be seen without scrolling. The Mac also felt sturdier to me than even the Lenovo.

Both Ultrabooks claim battery life of up to eight hours or so. In my battery tests, where I turn off all power-saving features, crank the screen brightness up all the way, leave the Wi-Fi on, and play a continuous loop of music, they fell well short of that. The Toshiba lasted 4 hours and 36 minutes and the Lenovo 4 hours and 50 minutes.

Still, these are respectable numbers in my harsh tests, and suggest to me that in more normal use with power-saving on, you could get six hours or so easily on these machines. However, the MacBook Air did much better, lasting 5 hours and 51 minutes on the same test—suggesting users would likely achieve Apple’s claimed seven hours of battery life in more normal use.

The two Ultrabooks booted up and rebooted much faster than most Windows laptops I’ve tested in the past, reaching a ready-to-use state, with Wi-Fi fully connected, in about 30 seconds when booting from scratch and under a minute on a reboot. They recovered from sleep in under 10 seconds. But the Mac beat them handily on all three measures.

For Windows shoppers who can afford to spend a little more this season, I believe Ultrabooks are a great choice.

Write to Walter S. Mossberg at walt.mossberg@wsj.com.

]]> http://allthingsd.com/20111214/ultrabooks-bring-speed-and-light-to-windows/feed/ 0 http://allthingsd.com/20111111/in-china-one-in-five-consumers-want-a-mac-as-their-next-pc/ http://allthingsd.com/20111111/in-china-one-in-five-consumers-want-a-mac-as-their-next-pc/#comments Fri, 11 Nov 2011 11:35:36 +0000 John Paczkowski http://allthingsd.com/?p=143069 China accounted for 16 percent of Apple’s fourth-quarter sales, or about $4.5 billion, making it the company’s second-largest market after the U.S.. So it should come as no surprise to hear that Apple products are particularly well regarded in the country. But to find that positive sentiment for the Mac has elevated it above all comers there is a bit of an eye-opener.

According to Morgan Stanley’s new China PC Survey, 21 percent of consumers considering the purchase of a new PC would like it to be a Mac. That’s more than said the same of Lenovo, Asus, Acer, Sony, Samsung, Hewlett-Packard and Dell. It’s also significantly more than the Mac’s current market share in the country, which hovers around about 5 percent.

So great news for Apple, right? Sure, were it not for one caveat. Most Macs are well beyond the $600 average price Chinese consumers typically pay for a PC. And few survey respondents said they were willing to meet those prices.

“Apple’s share gains in the near term are likely limited to the 7% of respondents who are willing to pay over $1,100 for a PC,” said Morgan Stanley analyst Katy Huberty. “In the long term, as Chinese consumers become more affluent, we believe Apple could see further share gains as it is the most desirable brand.”

And that does seem to be the trend here. Already the company’s growing retail presence in the region, along with a fast-developing brand preference for its products among higher-income consumers, is generating blockbuster sales and profits. As Apple CEO Tim Cook said earlier this year, “In my lifetime I’ve never seen a country with as many people rising into the middle class aspiring to buy products that Apple makes. It’s an area of enormous opportunity.”

]]> http://allthingsd.com/20111111/in-china-one-in-five-consumers-want-a-mac-as-their-next-pc/feed/ 0 http://allthingsd.com/20111109/a-guide-for-pc-buyers-not-looking-for-a-tablet/ http://allthingsd.com/20111109/a-guide-for-pc-buyers-not-looking-for-a-tablet/#comments Thu, 10 Nov 2011 02:02:27 +0000 Walter S. Mossberg http://allthingsd.com/?p=142638 If you’re shopping for a laptop this autumn, you’ll find most of the capabilities and prices in the sluggish market unchanged. You’ll still likely be considering whether it’s time to get a tablet instead of a new laptop.

But if you’re focused on a Windows machine, and you look carefully, you’ll see that a new class of portable PC is beginning to appear. It’s called the “ultrabook,” and is essentially the Windows version of Apple’s popular, nearly four-year old MacBook Air—an ultraskinny, light, speedy, versatile laptop with long battery life.

The arrival of the ultrabook is a welcome development, not only because it spices up the market, but because I consider the MacBook Air the best all-around consumer laptop available, and anything that emulates it is a good idea, if done well.

There are only a few ultrabooks available this season and they aren’t for everybody. Most have limited storage and, like the MacBook Air, are priced near the $1,000 range—rich territory in a tight economy where Apple buyers seem comfortable, though not many others. Still, this new class of Windows laptop is the only fundamentally fresh choice in the laptop market.

If the price is too high, you should be able to get a capable major-brand laptop for between $500 and $800, with plenty of storage and memory.

My annual fall laptop buyers’ guide today offers tips for wading through the technobabble in computer ads, and in online and physical stores. As always, these tips are for average consumers doing common tasks, such as email, Web browsing, social networking, general office productivity, photos, music, videos and simple games. This guide isn’t meant for corporate buyers, or for hard-core gamers or serious media producers.

The recently unveiled Asus Zenbook

The tablet question: Tablets like Apple’s iPad 2 and Samsung’s Galaxy Tab 10.1 can perform many, though not all, of the functions of a laptop. Most tablet lovers find themselves reaching for their laptops less often to do things like email. If your budget is limited and you’re thinking of shelling out $500 for a full-size tablet, consider whether you can put off getting a new laptop this year instead of buying both.

Future Windows: If you’re shopping for a Windows laptop, be aware that in 2012, Microsoft will offer a new version of Windows, called Windows 8, with a radical new multitouch interface that makes use of a touch screen. The software giant stresses that Windows 8 won’t require such a screen, and will still work with a mouse or touch pad. But unless you have a laptop with a multi-touch screen, you won’t be able to take advantage of the Windows 8 touch-screen features.

Ultrabooks: Four companies make this class of laptop: Acer, Lenovo, Asus and, shortly, Toshiba. These machines are under 0.8 inch thick, weigh less than three pounds, and generally claim long battery life and almost-instant startup times. All run Windows 7; none has a touch screen. Like the MacBook Air, they use solid-state drives (though some combine these with standard hard disks) and have screens of either 11 inches or 13 inches. Prices generally run from around $900 to $1,100.

Windows vs. Mac: Mac laptops cost more and offer less variety than Windows laptops. The least expensive Mac laptop is $999, while a few stripped-down Windows portables can be had for under $300. Well-equipped Windows laptops start at $500 to $600. But Apple laptops combine beauty, ruggedness and long battery life with good customer service. Macs also come with better built-in software, including the new Lion operating system, which includes some tablet-like features. And they can run Windows, at extra cost.

Finally, Mac users don’t fear viruses and other malicious software, because virtually none work on the Mac.

Memory: Get at least 4 gigabytes of memory, or RAM, on a new Windows computer. On a Mac, most consumers can get away with 2 gigabytes.

Processors: Intel’s latest chips are the i3, i5, and i7 Core models. But a laptop with chips from rival AMD, or older Intel dual-core chips, also is OK.

Graphics: Usually less expensive machines have wimpier graphics hardware, and costlier ones have more powerful graphics. Better graphics can make your whole machine faster, because more and more software is designed to offload general processing tasks onto the graphics chips.

Hard disks: A 320-gigabyte hard disk should be the minimum on most PCs. Solid-state disks, like those in the new ultrabooks or the MacBook Air, generally come in sizes of 128 GB or 256 GB. They omit moving parts and use flash memory to store your files, as on a smartphone or tablet. They are costlier, but faster, and use less power.

Ports: Many PCs now come with a port called HDMI, which makes linking to a high-definition TV easy. There is a new, much faster USB port, called USB 3.0, but few peripheral devices can use it. And Apple has introduced yet another high-speed connector that has little practical use so far, called Thunderbolt.

As always, be wary of sales pitches and don’t buy more laptop than you need.

Email Walt at mossberg@wsj.com.

]]> http://allthingsd.com/20111109/a-guide-for-pc-buyers-not-looking-for-a-tablet/feed/ 0 http://allthingsd.com/20111102/chinas-lenovo-proves-theres-life-in-the-pc-market-yet/ http://allthingsd.com/20111102/chinas-lenovo-proves-theres-life-in-the-pc-market-yet/#comments Wed, 02 Nov 2011 19:50:55 +0000 Arik Hesseldahl http://allthingsd.com/?p=139549 There’s still life in the PC industry. For evidence, look no further than the results of Lenovo, the China-based manufacturer that bought out IBM’s PC business a few years ago.

As The Wall Street Journal reported today, Lenovo’s profits rose by 88 percent, and it eclipsed Dell as the world’s No. 2 manufacturer, behind Hewlett-Packard. The company has been growing in part through acquisitions — it recently paid 465 million euros (about $640 million) for the German PC outfit Medion — but also by playing well in markets where people are still buying their first PCs, says Peter Hortensius, the president of Lenovo’s Global Product Group.

Lenovo’s results did good things for shares of rival HP, which last week announced that it will keep the PC unit it had previously considered spinning off. Its shares rose 1.8 percent to $26.06. Shares in Dell rose more than 1 percent to $15.29, while Intel fell 17 cents, or less than 1 percent.

Hortensius told me that much of Lenovo’s strength comes from being the top vendor in the world’s leading market, China, and also in its No. 3 market, Japan. In the world’s No. 2 market, the U.S. — not so much. Lenovo is fifth there, but that’s an improvement from prior periods, he says.

Another strength he noted is in emerging markets like Brazil, where lots of people are still buying their first device and just getting their first Internet connection and not ready to think about buying tablets or smartphones just yet. But Lenovo’s a big player there, too, and sells Android based smartphones and tablets in China. It also plans to sell tablets running Windows 8 when it’s released. And as part of a four-screen strategy, he said, the company will have more to say on the subject of smart TVs soon.

What it doesn’t have, at least in the U.S. yet, is a strong brand presence. And so it has crafted a marketing campaign around “people who do.” So what do you do when you need to get attention for a less-well known PC brand? You drop a laptop out of a plane, naturally. Of course there was a technical reason for doing it: Proving that the machine could boot up in time to deploy a parachute and land safely, though I have to wonder just how soft that landing was in reality. I embedded the spot below just because it looks cool.

]]> http://allthingsd.com/20111102/chinas-lenovo-proves-theres-life-in-the-pc-market-yet/feed/ 0 http://allthingsd.com/20111014/goldman-ipad-plus-slowing-economy-equals-lousy-pc-sales/ http://allthingsd.com/20111014/goldman-ipad-plus-slowing-economy-equals-lousy-pc-sales/#comments Fri, 14 Oct 2011 14:49:41 +0000 Arik Hesseldahl http://allthingsd.com/?p=132431 Quarterly earnings reports are due to start coming from numerous tech companies next week, and Goldman Sachs isn’t expecting much in the way of good news from any of them. The economic slowdown has hurt spending by both consumers and businesses. And the iPad continues to maul the conventional PC market.

In a research note to clients today, Goldman said that while most tech companies should report results in line with their forecasts, the forward guidance they give will be less than optimistic. “While we expect most of the September quarter companies to be able to meet expectations for the quarter, we also expect an increasingly cautious tone from all of the companies, and we continue to see risk to 2012 consensus estimates for nearly all of the names in our space.”

To that end, Goldman revised its PC unit sales forecast downward. Following the latest PC market data from the research firm IDC, Goldman says the demand environment for PCs is “even more difficult than we had previously envisioned.”

Slower spending, the end of a PC refresh cycle and cannibalization by the tablet market — which we all know is really just an iPad market — has prompted Goldman to slash its PC unit sales growth forecast to 2.1 percent for 2011; 4.3 percent in 2012; and 6.9 percent in 2013. The iPad 3, already said to be in production and expected early next year, won’t give the PC makers any help.

One key problem PC makers face is pricing: In order to avoid being stuck with unsold inventory, manufacturers, resellers and retailers will be forced to slash their prices to the bone and then some, which will hurt their already-thin profit margins. This is why Goldman rates Dell — now the No. 3 PC maker, behind Hewlett-Packard and Lenovo — a “sell” right now. Goldman expects the average selling price on PCs to drop nearly 3 percent in 2011, and more than 9 percent in 2012.

The exception to its tech pessimism? Apple, naturally. Reporting its results on Oct. 18, Apple isn’t suffering from the economic headwinds. Goldman expects Apple to sell 13 million iPads in the quarter, which would represent growth of 211 percent year over year.

Goldman expects Apple to report earnings of $7.30 per share on $28.7 billion in sales, but admits that could be conservative, because who knows how good today’s launch of the iPhone 4S will turn out? As Goldman puts it: “Indeed, if iPhone units are flat sequentially, this would support earnings per share of approximately $8.00 for the quarter.”

]]> http://allthingsd.com/20111014/goldman-ipad-plus-slowing-economy-equals-lousy-pc-sales/feed/ 0 http://allthingsd.com/20110825/amd-names-lenovo-coo-rory-p-read-as-its-new-ceo/ http://allthingsd.com/20110825/amd-names-lenovo-coo-rory-p-read-as-its-new-ceo/#comments Thu, 25 Aug 2011 14:45:47 +0000 Arik Hesseldahl http://allthingsd.com/?p=113936 The long CEO search at chipmaker Advanced Micro Devices is over. AMD today named Rory P. Read, the COO of Chinese PC maker Lenovo, as its next CEO.

The end of the search comes just as suddenly as it began, with Dirk Meyer’s surprise resignation in January. The search was a tough one, in no small part because AMD — whose business is already complicated by the fact that it has to compete with Intel — is widely seen as missing the boat on key new markets like mobile computing and tablets.

It’s equally surprising that there were no leaks about this hiring, though word had circulated that several A-list executives had been approached and turned the job down. Among them: Pat Gelsinger, COO of EMC and a former CTO of Intel, said no twice; both Michael Capellas, the former CEO of WorldCom and Compaq, and William Nuti, CEO of NCR, turned down AMD’s inquiries.

So, who is Rory Read? His bio at Lenovo says he led that company’s American unit to a $140 million surge in profitability in 2007, and revenue grew 14 percent on his watch. Before that, he spent 23 years at IBM — remember that Lenovo bought out IBM’s PC division for $1.75 billion in 2005.

AMD shares rose 10 cents, or more than 1.5 percent, as of 10:40 AM Eastern time.

]]> http://allthingsd.com/20110825/amd-names-lenovo-coo-rory-p-read-as-its-new-ceo/feed/ 0 http://allthingsd.com/20110824/hps-todd-bradley-talks-about-pc-units-future-and-his-own-video/ http://allthingsd.com/20110824/hps-todd-bradley-talks-about-pc-units-future-and-his-own-video/#comments Wed, 24 Aug 2011 17:12:24 +0000 Arik Hesseldahl http://allthingsd.com/?p=113444 There are lots of competing theories about the ultimate fate of Hewlett-Packard’s $41 billion Personal Systems Group. Spinoff? Sale? Nothing at all? They’re all on the table.

The unit’s head and likely CEO in a spinoff scenario, Todd Bradley, took to Bloomberg TV’s airwaves yesterday for an extensive interview with hosts Emily Chang and Cory Johnson. The 13-minute segment is below.

Among the highlights: Johnson’s setup, wherein he quotes Hewlett-Packard co-founder David Packard as saying, “The only thing worse than a shitty business is a big shitty business,” and Bradley’s blunt refusal to answer when Chang asks if he endorsed the move to “explore strategic options” for the PC business.

Bradley also insists that the unit would sell at a higher valuation than 0.25 times sales, which would be about $10 billion. Most analysts say the unit would be valued at a fraction of the trailing year’s sales. The valuation argument may be moot now that Samsung, the most logical buyer, says it’s not interested, thus making a spinout more likely.

Later, Chang asks why HP isn’t giving the TouchPad and other webOS devices more of a chance in the marketplace. (Um, because sales were dismal?) She goes on to ask Bradley about his professional plans, about which there has been constant speculation since The Wall Street Journal reported in March that he had been recruited by Intel.

Bradley reiterates that he’s interested in running the independent PC company that might result from a spinout, and flatly denies that he’s looking for a new job somewhere else, then proceeds to paint a sunny picture about the PC unit’s prospects: “The PC market is only about 25 percent penetrated,” he says. He has a point, until you consider that many people might skip them altogether and move straight to tablets and smart phones.

]]> http://allthingsd.com/20110824/hps-todd-bradley-talks-about-pc-units-future-and-his-own-video/feed/ 0 http://allthingsd.com/20110822/lenovo-apple-cant-dominate-tablet-market-for-ever/ http://allthingsd.com/20110822/lenovo-apple-cant-dominate-tablet-market-for-ever/#comments Mon, 22 Aug 2011 11:00:33 +0000 John Paczkowski http://allthingsd.com/?p=112480 Last week, Apple overtook Lenovo in revenue in greater China for the first time in about a decade, and the Chinese company’s leadership seems to be having a difficult time accepting the news.

Lenovo CEO Yang Yuanqing’s first response to Apple’s achievement? To dismiss it. In his view, any comparison of the two companies’ revenues is incongruent.

“That is not an ‘apples to apples’ calculation,” he said. “Their calculation includes the phone business but Lenovo’s main focus is in PCs; our phone business isn’t that strong even in China.”

But then that’s sort of the point, isn’t it? If that business were stronger and Lenovo’s Android-based Lephone was better established in the market, Yang might not have cause to take issue with the assertion that Apple’s sales have overtaken Lenovo’s own. The fact is that Cupertino’s third-quarter sales in greater China hit $3.8 billion, and Lenovo’s did not.

But Yang intends to change that, and soon, with a portfolio of Android and Windows tablets that he hopes will end Apple’s domination of the tablet market. “We will be one of the strongest of the players in this area,” Yang told the Financial Times.

But how, when even once-promising tablet challengers like Hewlett-Packard’s webOS-based TouchPad have failed so miserably? By targeting every single stratum of the tablet market.

“Apple only covers the top tier,” Yang explained. “With a $500 price you cannot go to the small cities, townships, low salary class, low income class. … Apple is very strong, but when IBM created the PC market there was just IBM; if you look at the PC industry now it is very diversified. I believe that will happen in tablets as well.”

]]> http://allthingsd.com/20110822/lenovo-apple-cant-dominate-tablet-market-for-ever/feed/ 0 http://allthingsd.com/20110819/with-hps-raising-of-the-worlds-biggest-white-flag-will-jon-rubinstein-and-todd-bradley-surrender-too/ http://allthingsd.com/20110819/with-hps-raising-of-the-worlds-biggest-white-flag-will-jon-rubinstein-and-todd-bradley-surrender-too/#comments Fri, 19 Aug 2011 16:08:13 +0000 Kara Swisher http://allthingsd.com/?p=112015

It wasn’t until dinner this past Sunday night that CEO Léo Apotheker told Todd Bradley, the head of its Personal Systems Group, that he was about to push key parts of Bradley’s huge unit off the cliff.

That included stopping selling hardware — smartphones and TouchPad tablets — based on the webOS it acquired from Palm last year, a $1.2 billion deal that Bradley played a big part in.

In addition, HP said it was considering spinning out its PC business and would “explore options to optimize the value of webOS software going forward.”

But, until a few days ago, several sources close to the situation said, Bradley knew nothing of these plans and neither did webOS’s key driver of late, former Palm CEO Jon Rubinstein.

This surprising lack of disclosure by HP to two of its key execs begs the question: Will they stay or will they go now?

According to sources, staying put is the plan for both for now, although it depends on what such a spinoff will look like.

It’s clear at this point that Bradley — who was once the CEO of Palm himself and was once considered the most likely successor to former CEO Mark Hurd, before Hurd’s sudden resignation last year — is the leading CEO candidate of its spun-out independent PC company if that’s what HP decides to do.

But it’s not a lock, either. And, apparently, Bradley has not been locked in with regards to a spinoff either and would likely have a lot of offers from tech companies in Silicon Valley to choose from if he wanted.

“Who will they get if Bradley goes at this point, if they want to spin it off?” said one person at the company.

But, added another: “Bradley is in the catbird seat if he wants to be and it’s his to lose.”

That depends, of course, on what his is.

Questions include:

Will that new company include any of the consumer part of the printer business — a huge cash cow — if HP is indeed leaving the arena?

Will webOS go with the new set-up, so that it can take advantage of the patents and licensing income?

Will HP continue to be the brand name on the devices this computer company spinoff would make?

These are just a few of the issues in a deal of untold complexity. But perhaps the most obvious one is who would get custody of Rubinstein?

To begin: Bradley is a big fan and would certainly want him around if there were a spinoff, said several sources.

But to do what?

Rubinstein, a well-known tech exec, had been leading the webOS efforts for HP, but was recently moved upstairs to a larger but fuzzy role, to run product development and innovation for the PSG unit. He has been reporting to Bradley.

At the time, the move was seen by many as the first step out the door by Rubinstein, with one person joking that “he’d much rather be at his Mexican beach house than HP.”

Among the disgruntlements: Several sources said Rubinstein felt that TouchPad wasn’t ready to ship and that Apotheker has reneged on a public promise not to until the tablet was “perfect.”

That ire is no surprise, since the device was then subject to tough criticism, including by AllThingsD’s Walt Mossberg, who noted in his review:

“… In my view, despite its attractive and different user interface, this first version is simply no match for the iPad. It suffers from poor battery life, a paucity of apps and other deficits.”

In addition, unlike others there, Rubinstein has been more of a product guy and not an HP lifer. That begs the question of whether he’d like to sign up to another big company stint, even if he had more control.

“He’s been to that party before, and the reality is that he is not a career big company person,” said one person.

One important note: Rubinstein was unable to make webOS work when Palm was already a standalone independent company. And, although a new HP spinoff would be huge and better funded, it is still very much an uphill and competitive battle on the computer, smartphone and tablet fronts.

In addition, keeping a competitive operating system going is also a costly bear of an issue.

“It’s a cyclical, high-velocity business and there are other huge players from Apple and Google in smartphones and tablets to Lenovo and Dell in PCs,” said another source. “There might be a lot of great products in the pipeline for webOS, but it will not be easy to make them a success.”

That said, noted another person who knows Rubinstein well, “he really cares about webOS and does not want to see it go away.”

That might be true, although that is just what might happen if HP decides to sell it off to someone else or makes the spinoff a difficult endeavor.

In that case, it’s an offer Bradley and Rubinstein can refuse.

Related posts

• Hewlett-Packard Says Goodbye to PCs, webOS
• HP Pulls Plug on webOS Hardware, Leaves OS Future in Doubt
• HP And webOS: But They Seemed So Happy Together!
• Liveblogging HP’s “Everything Including the Kitchen Sink” Conference Call
• HP’s Apotheker: We Struck Out with WebOS, but Maybe Someone Else Wants a Swing?
• Viral Video: Like Palm’s Creepy Naked Lady, TouchPad’s Floating Celeb Heads Get the HP Boot
• Licensing webOS May Not Be Much of an Option for HP
• Hewlett-Packard’s PC Business: What Happens Next?
• Worth More Dead Than Alive: Could HP Turn a Profit on Palm’s Patents?
• With HP’s Raising of the World’s Biggest White Flag, Will Jon Rubinstein and Todd Bradley Surrender Too?

]]> http://allthingsd.com/20110819/with-hps-raising-of-the-worlds-biggest-white-flag-will-jon-rubinstein-and-todd-bradley-surrender-too/feed/ 0 http://allthingsd.com/20110818/lenovos-net-profit-nearly-doubles/ http://allthingsd.com/20110818/lenovos-net-profit-nearly-doubles/#comments Thu, 18 Aug 2011 12:00:03 +0000 Owen Fletcher and Joanne Chiu http://allthingsd.com/?p=111487 Lenovo Group Ltd.’s fiscal first-quarter net profit nearly doubled because of strong growth in personal-computer shipments, and the Chinese computer maker said it expects continued growth in commercial PC demand and in its core home market.

The results come as PC makers benefit from a wave of companies upgrading their computer hardware. Lenovo has also benefited from business in China and other emerging markets, where demand is outperforming a weak consumer segment in the U.S. and other developed markets.

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]]> http://allthingsd.com/20110818/lenovos-net-profit-nearly-doubles/feed/ 0 http://allthingsd.com/20110719/lenovo-jumps-into-tablet-fray-with-two-android-models-and-a-windows-7-device-for-good-measure/ http://allthingsd.com/20110719/lenovo-jumps-into-tablet-fray-with-two-android-models-and-a-windows-7-device-for-good-measure/#comments Wed, 20 Jul 2011 04:00:44 +0000 Ina Fried http://allthingsd.com/?p=99923 After sitting on the sidelines for much of this year, Lenovo is just about ready to enter the Android tablet market.

The company is announcing both a consumer model, the IdeaPad Tablet K1, and a more business-oriented product, the ThinkPad Tablet. The former features support for Netflix and a range of included entertainment software, while the latter features pen support and an optional plug-in keyboard dock. Both products have 10-inch screens, start at $499 and will go on sale in August, with pre-orders being taken starting on Wednesday.

“Tablets are extremely personal technology devices,” Senior VP Liu Jun said in a statement. “That’s why we’ve created a family of tablets that has something for everyone, including entertainment-friendly features and content for consumers, or business-friendly features to enhance productivity for professionals as well as security and manageability for IT managers.”

The IdeaPad includes 32GB of memory, while the ThinkPad Tablet comes with 16GB of memory and includes a variety of features aimed at offering business-level security and reliability. The initial ThinkPad model is Wi-Fi only, but Lenovo said 3G models are also in the works and should come shortly after the first ThinkPad Tablets hit the market.

Lenovo is planning its own Lenovo App Shop to provide access to apps customized and tested for its hardware as well as to allow businesses to serve up programs privately to their users.

The company is just the latest big name announcing plans for an Android tablet. Sony is also hoping to prove that taking one’s time can pay off, with its first Android tablets — the slate-shaped S1 and clamshell S2 — not expected until this fall.

The question is just how big the market is for Android tablets, at least at this juncture, with few apps available and a number of hardware makers already selling products, including Motorola, Acer and Samsung, to name just a few.

Lenovo also has plans for a new Windows 7 tablet, the IdeaPad Tablet P1, due in the fourth quarter.

]]> http://allthingsd.com/20110719/lenovo-jumps-into-tablet-fray-with-two-android-models-and-a-windows-7-device-for-good-measure/feed/ 0 http://allthingsd.com/20110602/exclusive-lenovo-exec-sees-a-lot-to-like-in-windows-8-but-betting-on-android-too/ http://allthingsd.com/20110602/exclusive-lenovo-exec-sees-a-lot-to-like-in-windows-8-but-betting-on-android-too/#comments Thu, 02 Jun 2011 17:36:14 +0000 Ina Fried http://allthingsd.com/?p=82217 When Peter Hortensius looks at Windows 8, he sees a lot to like.

Of course, as president of Lenovo’s product unit, Hortensius has been looking at Windows 8 for a lot longer than the rest of us, most of whom got their first glimpse of the new Windows when it was shown on stage at D9 on Wednesday.

“It’s definitely going to be a big, bold move,” Hortensius said.

Hortensius said that Windows 8 will appeal to those who buy traditional PCs, will make those devices better and will also open up new opportunities with new kinds of machines based on ARM processors.

“You will see both the ARM platforms and the base Intel platforms get substantially better,” he said. “We find that very exciting.”

In particular, Hortensius pointed to the ability of Windows 8 machines not only to resume quickly from sleep, but also to maintain a network connection so they are also quickly usable.

“The part that makes me most excited is not just the new look, but along with that comes features like always-on, always-connected, which really to me addresses a big sore point of the traditional PC,” he said. “I have to boot it and I have to then restore connections.”

Hortensius said he isn’t too worried that businesses will be scared off by the new tiled start-screen that accompanies the traditional Windows desktop. Nor does he think it is that big a deal that Microsoft isn’t allowing customers an option of just booting into a more traditional Windows desktop.

“If business customers want that, they already have that,” he said. “It’s called Windows 7.”

But, as many doors as it sees being opened by Windows 8, Lenovo is also expanding its bet on Android. The company has already launched a couple of products in China, but is preparing a number of Honeycomb-based tablets for a global launch this summer.

One area Lenovo is exploring is the notion of incorporating a pen back into tablet computing.

“What you are doing right now, you could not do with your finger,” Hortensius said, pointing to the fact that I was taking handwritten notes. “The touch interface is amazing. If you are trying to quickly look through stuff it is wonderful. There are a lot of other instances where you clearly would rather use a pen.”

As for having to support multiple operating systems, Hortensius said that is probably just a fact of life.

“I think that’s the new world,” he said.

]]> http://allthingsd.com/20110602/exclusive-lenovo-exec-sees-a-lot-to-like-in-windows-8-but-betting-on-android-too/feed/ 0 http://allthingsd.com/20110414/apple-sorry-about-that-whole-shrinking-pc-market-thing-well-not-really/ http://allthingsd.com/20110414/apple-sorry-about-that-whole-shrinking-pc-market-thing-well-not-really/#comments Thu, 14 Apr 2011 12:45:42 +0000 Arik Hesseldahl http://newenterprise.allthingsd.com/?p=5071 Gartner and IDC are out with their quarterly look at the state of the PC market and the results are not pretty–that is, unless you’re Apple.

In a repeat of a trend seen last quarter, both firms report that the market shrank in the first quarter of the year. This would constitute the first market contraction in six quarters, and the first since the onset of the recession. They differ, however, on the size of that contraction: IDC pegs it at 3.2 percent since the first quarter of 2010; Gartner at 1.1 percent.

To be fair, let’s remember that the first quarter of the year is always seasonably slow for PC purchases because two things tend to happen in the fourth quarter: Consumers splurge on gifts for family and frankly for themselves too, and take advantage of crazy deals offered by retailers desperate to clear out their inventory. On the business side, some CIOs take the opportunity to use up unspent funds in their budgets, and get employees starting off the new year with a fresh new machine at their desks. However, this tendency is just as often offset by the start of a new budget year. Whichever way you slice it, the first quarter is always weak on consumer sales though a bit stronger on the enterprise side.

So what happened? The iPad 2, for one thing. “With the launch of the iPad 2 in February, more consumers either switched to buying an alternative device, or simply held back from buying PCs,” is how Mikako Kitagawa, principal analyst at Gartner, put it. “We’re investigating whether this trend is likely to have a long-term effect on the PC market.” Ya think?

Bob O’Donnell, IDC’s vice president for Clients and Displays, wasn’t quite as willing to blame the iPad: “Slower than expected commercial growth in the first quarter failed to offset the ongoing challenges in the consumer market,” he said in a statement. “While it’s tempting to blame the decline completely on the growth of media tablets, we believe other factors, including extended PC lifetimes and the lack of compelling new PC experiences, played equally significant roles.”

Jay Chou, another IDC analyst put it much more succinctly: “‘Good-enough computing’ has become a firm reality.”

The picture gets no better when you look at regional results. IDC says shipments declined in the U.S. by 10 percent. Gartner pegged it at 6 percent. It was, Gartner noted, the third consecutive quarter for year-on-year declines in U.S. notebook sales. Shipments in Europe contracted too, and Japan, which was already expected to be a weak market this quarter, has other things on its mind since the devastating earthquake and tsunami. Asia was the only bright spot, where shipments increased by 5.6 percent in IDC’s forecast and 4.1 percent in Gartner’s. China, IDC noted, failed to reach double-digit growth, and consumers in India, Gartner says, were distracted by the Cricket World Cup. Okay, then.

So how do the numbers look? Since IDC’s forecast is the most dire, I’ll start there:

The worldwide demand for PCs was 80.6 million units. Hewlett-Packard sold 15.2 million; Dell, which just made it back to second place, shipped 10.3 million; Acer 9 million; Lenovo 8.2 million; Toshiba 4.8 million; while “others” clocked 33 million. All vendors except for Lenovo saw declines. The worst decline was Acer’s, whose shipments fell nearly 16 percent. (Now we know why its CEO Gianfranco Lanci lost his job.) Lenovo, on the other hand, saw its shipments improve by more than 16 percent.

Demand in the U.S. was 16.1 million. HP led with 4.3 million, Dell 3.7 million, Toshiba 1.6 million, Apple 1.4 million and Acer 1.3 million. Unnamed others sold 3.7 million. Acer saw its shipments fall by an alarming 42 percent. Apple and Toshiba posted gains of 9.6 and 10.4 percent respectively. HP and Dell both saw declines.

Now let’s look at Gartner’s numbers (remember that each firm tracks the market a little differently):

Gartner pegged the worldwide market at 84.2 million units. It says HP sold 14.8 million, Acer 10.9 million, Dell 10 million, Lenovo 8.2 million, Toshiba 4.8 million. (Clearly there’s a difference in how they see Acer and Lenovo’s performances.)

In the U.S., Gartner estimated the market at 16.1 million units. By its reckoning, HP sold 4.2 million, Dell 3.6 million, Acer 1.8 million, Toshiba 1.7 million, Apple 1.5 million, others 3.3 million.

]]> http://allthingsd.com/20110414/apple-sorry-about-that-whole-shrinking-pc-market-thing-well-not-really/feed/ 21 http://allthingsd.com/20110217/lenovo-net-jumps-25-percent/ http://allthingsd.com/20110217/lenovo-net-jumps-25-percent/#comments Thu, 17 Feb 2011 17:33:42 +0000 Loretta Chao http://voices.allthingsd.com/?p=36470 China’s Lenovo Group Ltd., announcing its largest profit in two-and-a-half years, said Thursday it is making strong market-share gains in emerging markets, including China–which it forecasts will “soon” become the world’s top personal-computer market.

Lenovo’s net profit in its fiscal third quarter, which ended Dec. 31, was up 25% to $99.65 million, on $5.81 billion in revenue, thanks in part to lower component costs. Executives say they will focus on new products such as the Lepad tablet PC, due for release in China this quarter and overseas in June, and on expanding the company’s mobile-Internet business.

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