Lenovo expands into smart devices
Lenovo's foray into smart air purifiers, glasses and routers will distract it from many more important tasks at hand, and are likely to end in failures.
Let's look quickly at each of these three product areas, as all are quite different and have varying degrees of relevance to Lenovo's core PC and cellphone businesses. Air purifiers look like the most distant relative to Lenovo's current businesses, as such devices don't rely heavily on computing power or wireless communications. But that said, this is certainly a product category with huge potential due to growing consumer awareness about air pollution in China.
Whether or not Lenovo is the right company to sell these devices is a different matter, since air purifiers don't require a lot of intelligent functions such as the ability to turn them on and off or adjust them over the Internet. What's more, Lenovo's big strength is its vast distribution networks into China's smaller cities, which isn't really the market for air purifiers that are mostly a product for wealthier, educated people living in big cities.
Lenovo's push into these new devices looks somewhat similar to another trend that saw PC and cellphone makers pile into TVs nearly a decade ago, around the time when flat screen models were making their big rise. That campaign saw names like Hewlett-Packard (NYSE: HPQ) and Motorola all enter the business, only to eventually drop the product line when it became clear they couldn't compete with the more established TV makers.
Lenovo already has its hands quite full with several major acquisitions and new product initiatives, including its pending purchases of IBM's (NYSE: IBM) low-end server business and Google's Motorola Mobility cellphone unit. It also needs to focus more on its own cellphones, which are quickly gaining a reputation as cheap and unreliable products -- not exactly the image it wants to cultivate if it someday hopes to compete with Apple (Nasdaq: AAPL) and Samsung (Seoul: 005930). Against that backdrop, this move into smart devices looks like yet another unneeded distraction, and one that's likely to end mostly in failure.
Bottom line: Lenovo's foray into smart air purifiers, glasses and routers will distract it from many more important tasks at hand, and are likely to end in failures.