beyondbrics

The phrase “a war with iPhone” slipped from the mouth of Lenovo’s chairman, Liu Chuanzhi, when the Chinese electronics company launched its smartphone handset – the LePhone – last year. With the recent launch of its first tablet – the LePad – the company hopes to take on Apple again, albeit only in the Chinese market.

In a sector so dominated by the iPad, which takes 80 per cent of the global market, it’s tempting to dismiss any new potentials ‘iPad Killers’. But it’s safe to say that in China’s domestic market, the LePad represents a plausible rival.

Last year only 600,000 tablet devices were sold in China. That could grow by 300 per cent this year to 2.5 million, according to IDC, the technology research company.

As a leader in Chinese PC market – with a recognised brand and well established distribution channels – Lenovo (992:HKG) has an obvious advantage in taking on Apple (AAPL:NSQ), compared to the local tablets producers, like Aigo, Hanwang and TCL.

The LePad itself also has some clear advantages in the Chinese market.

Through its Google Android operating system, it offers a Chinese interface and around 1,000 Chinese-language applications. It also supports Flash – the video format commonly used on the internet – unlike the iPad. Chinese users much prefer to stream videos from various internet sources – usually in Flash format.

The LePad also has some popular Chinese character hand-writing functions – vital for many wealthy middle-aged Chinese unaccustomed to typing. And while it’s currently running Android, buyers will have the option to switch it to Windows 7.

During its 12 days of online pre-sale, 1,500 LePad devices were sold through Taobao online stores. Lenovo said that orders for more than 100,000 LePads were made on March 29, the first day of its sale, and the company has since signed contracts with retailers Gome, Suning and PC Mall.

But to price sensitive Chinese consumers, LePad’s price may yet prove a problem.

Before the launch, chief secretary of China’s mobile internet industry association, Li Yi, suggested on Sina Weibo (China’s version of Twitter), that Lenovo should price the LePad between Rmb2,000 – 3,500 ($305 – $535).

The actual price turned out to be a big surprise.

Starting from Rmb3,499, the LePad is more expensive than the iPad, which is available from Rmb2,888 in China. On that basis, the LePad is closer in price to the iPad 2, which hasn’t been officially on sale in China but has a grey market price of over Rmb5,000. Add in a keyboard and the LePad could cost as much as Rmb8,888.

A lucky number in China, but perhaps a tough sell.

Related reading:
Revamped Lenovo takes battle back to Acer, FT
Lenovo joins tablet war with LePad, FT
HTC: bigger than Nokia, for now, beyondbrics