Business Tech

The "smartbook" aspires to put the smartphone into the laptop. Will it be able to elevate an Apple iPhone or Motorola Droid-like experience to a larger device, or is it just more marketing mumbo-jumbo?

Two companies are hoping that the smartbook will turn out to be more than just another quickly-forgotten device sales pitch. Qualcomm and Freescale, which are both supplying key silicon technology for the devices, are pushing to make smartbooks different enough from laptops--and Netbooks--that consumers will take notice.

Qualcomm CEO Paul Jacobs holds the Lenovo smartbook, which will appear at CES in January.

(Credit: Qualcomm)

The first tangible evidence of smartbooks to come will be seen at the Consumer Electronics Show in January, where Lenovo, among others, is expected to show, if not roll out, smartbook designs.

One pesky question won't go away, however. Why go out of the way to call it a smartbook? Doesn't Netbook suffice? (And it can potentially be very confusing for consumers since both terms have "book" in them.) On one level, the nomenclature choice is simply to counter the Microsoft-Intel Netbook juggernaut: Another Netbook among dozens already on the market won't draw much attention.

But at a deeper level, the two companies are trying to make the smartbook substantively different from a Netbook. Qualcomm sees it, in essence, as a large smartphone, which leaves the outdated Windows desktop experience in the dust. "A Netbook in our view is just a cheap laptop that runs Windows. We see the smartbook cannibalizing the Netbook. ... Read more

After three quarters of losses, Lenovo has turned a profit again. The computer maker announced Thursday that its fiscal second-quarter earnings more than doubled to $53 million versus $23 million a year ago.

Profit for the quarter ended September blew way past estimates of only $24 million from analysts surveyed by Bloomberg.

Despite a 5.2 percent sales decline to $4.1 billion from $4.3 billion in the year-ago quarter, Lenovo achieved its profits through extensive cost cuts and a record leap in market share.

(Credit: Lenovo)

The company had previously kick-started a major restructuring program designed to trim expenses and streamline business operations. As a result, Lenovo was forced to lay off a sizable number of employees and take a one-time restructuring charge of $3 million in the second quarter. But the company now expects to save around $300 million annually.

During the quarter, Lenovo says it also saw its worldwide PC shipments surge 17 percent over the prior year, dramatically outpacing the industry average of only 2.3 percent.

"In the last quarter, our share in the global market climbed to a historic high and we returned to profit," said Lenovo CEO Yang Yuanqing in a statement. "At the same time, our expenses-to-revenue ratio improved notably, reaching the best level since the acquisition of IBM's PC division. These achievements bear witness to the clear strategies we set at the beginning of the year and our effective execution of those strategies."

Lenovo's quarterly results were powered by its notebooks, which contributed 63 percent to overall revenue. Though notebook sales dipped 1 percent from the prior year, shipments shot up 37 percent, compared with an industry average of 16 percent.

During the quarter, the company unveiled a few new products, including the IdeaPad U450p, a thin and light consumer laptop, and SimpleTap, an application to help users navigate the touchscreens on Windows 7-enabled machines like the ThinkPad X200 Tablet and ThinkPad T400s.

Desktop sales, however, fell 13 percent from the prior year's quarter, kicking in only 35 percent to Lenovo's overall revenue. Desktop shipments fell 2 percent, but outpaced the industry average of a 12 percent decline. The company said it has reacted to the PC market shift from desktops to laptops by introducing new entry-level low-cost desktops and revamping its product line for small and medium-sized businesses.

Lenovo enjoyed a stellar second quarter in its home base of China where sales jumped 9 percent to $2 billion. Shipments in the country jumped 28 percent compared with the average of only 0.1 percent. Already the leading PC vendor in China, the company boosted its market share there to 29.4 percent.

Earlier this year, Lenovo said that it would refocus its efforts on China and other emerging markets, a strategy that appears to have paid off.

"Our results are moving in the right direction and we are particularly pleased with our performance in China and in the transactional business model," said Lenovo Chairman Liu Chuanzhi in a statement.

The year had been a volatile one for Lenovo. The company was hit a string of quarterly losses, leading to the resignation of President and CEO William Amelio in February. Job cuts and the restructuring also took their toll.

But based on its second quarter, Lenovo is optimistic about the near term.

"In the coming quarters, we will continue to reinforce our leadership in China, improve the sustainability and profitability of mature markets, seize growth opportunities in emerging markets and our transactional business, continue to strengthen cost structure, and innovate with raising efficiency and customers' needs in mind," said Chuanzhi.

Lenovo's ThinkPad T61 is one of several notebooks known to have an error-prone battery.

(Credit: CNET)

Lenovo on Friday said it will replace batteries on several of its ThinkPad laptops that show error messages.

Some users are reporting batteries are displaying error messages that read "Irreparable damage" or "Battery cannot be charged," and others are reporting their battery runs only for a very short time or experiences a sudden drop in its fuel gauge. It's known to occur on these ThinkPad models: T60, T61, R60, R61, X60, and X61.

Though it does not pose a safety risk, and it is not a product recall, Lenovo said, it will give those affected a replacement battery.

This was originally published at ZDNet's Between the Lines.

Lenovo reported a net loss for its fiscal first quarter as revenue skidded 18 percent because of weak enterprise spending.

The company reported a net loss of $16 million, or 18 cents a share, in the first quarter, on revenue of $3.5 billion. Lenovo, which remains tethered to the commercial market, has been restructuring to cut costs. In addition, Lenovo remains a tale of two companies. The company leads in China and is extending PCs to the countryside and leveraging 3G mobile adoption. However, Lenovo has struggled in mature markets such as the U.S. and Europe.

(Credit: Larry Dignan/ZDNet)

Lenovo CEO Yang Yuanqing said the plan is to "continue to extend our leadership in China, strive to restore profitability in mature markets, and also seize opportunities in emerging markets and the transactional space."

As for the outlook, Lenovo said that it expects enterprise spending to remain weak in its second fiscal quarter, but will continue to cut costs to restore profitability.

(Credit: Larry Dignan/ZDNet)

By the numbers:

• Sales in China in the fiscal first quarter, which ended June 30, were $1.7 billion, or 48 percent of the total. Lenovo has a 28.6 percent market share in China.

• Mature market sales were $1.3 billion, 38 percent of the total in the first quarter.

• Emerging market sales were $474 million. Lenovo said it is targeting Latin America, Russia and Turkey as key countries. The company added that it needs to become more of a consumer player in these markets.

• Notebook computers are 64 percent of Lenovo's sales.

Nvidia on Monday confirmed that Samsung will bring out a Netbook based on the graphics chipmaker's Ion chipset, another design that breaks the Netbook mold.

"Ion really transforms these small laptops, like the upcoming Samsung and Lenovo Ideapad S12, into fully capable notebooks," Rene Haas, general manager of notebook products at Nvidia said Monday in a statement.

Ion brings mainstream PC graphics to Netbooks, including 1080p high-definition video support and better gaming, according to Nvidia.

The disclosure of the Samsung Netbook follows the Lenovo IdeaPad S12--due in August--the first Netbook announced from a major PC maker to employ the Nvidia chip.

Upcoming Samsung Netbook based on Nvidia's Ion chipset and Intel Atom processor

(Credit: Nvidia)

Though Nvidia would not confirm specifications, Netbook Choice is reporting that the Netbook, branded the Samsung N510, is due in July and will sport an 11.6-inch screen--large for the Netbook category, where screens typically top out at about 10 inches.

The Samsung Netbook would be another manifestation, following the Lenovo IdeaPad S12, of Nvidia's efforts to break the Netbook mold as defined by Intel: a low-performance device with a screen under 11 inches in diagonal size. Nvidia claims designs like Samsung's and Lenovo's are more notebook than Netbook.

Samsung's Netbook bears Nvidia badge

(Credit: Nvidia)

"The Netbook term was created by Intel to define a segment offering a limited experience, but with Ion you don't have those same limitations," Nvidia's Haas said. "These systems can handle mainstream gaming, HD video, and new GPU-powered applications. You might as well call them notebooks, because that's what they are."

The N510 will also pack an Intel 1.66GHz N280 Atom processor, according to Netbook Choice. The N280 is Intel's latest Atom processor that, ironically, is offered to Netbook makers with supporting Intel silicon that delivers better graphics performance than previous Intel Atom technology. That Intel feature, however, is not available when a PC maker uses Nvidia's higher-performance Ion silicon that integrates Nvidia's 9400M graphics chip--the same chip used in Apple's MacBook line.

Other Samsung Netbook features include a 160GB hard disk drive, 1GB of memory, and Wi-Fi (draft-n), Bluetooth, and a Webcam, according to Netbook Choice.

Nvidia's Ion is also used in tiny desktop PCs such as the Acer AspireRevo and ASUS eeeTop.

The global recession has taken a toll on yet another computer company.

Lenovo reported on Thursday a net loss and sales decline for both the fourth quarter and fiscal year ended March 31. The Hong-Kong-based PC maker watched its annual revenue shrink to $14.9 billion, a drop of 8.9 percent from the previous year. Including restructuring costs and one-time expenses, the annual net loss totaled $188 million.

For the fourth quarter, sales slumped 25.8 percent to $2.8 billion, combined with a pre-tax loss of $268 million.

Results were certainly hurt by the restructuring costs, which contributed $146 million to the annual loss, and the one-time charges, which added $71 million to the fourth-quarter decline.

But Lenovo placed most of the blame on its meager fourth-quarter global PC shipments, which dropped 8.2 percent from the previous year. To combat the downturn, the company had already announced a cost-cutting and restructuring program, which it hopes will save around $300 million for the 2009-10 fiscal year.

Lenovo's 2008 Results

"The past two quarters have been a particularly challenging time in our industry worldwide, and we took some significant steps to get our business back on the right path," said Lenovo Chairman Liu Chuanzhi. "We remain committed to growing our business profitably worldwide, and while our performance in the fourth fiscal quarter did not meet our expectations, we are confident that we have the right pieces in place to hit our financial targets and be ready to take advantage as economic conditions improve."

Despite the weakness in the PC market, sales of Lenovo notebooks accounted for close to 60 percent of fourth-quarter revenue. Lenovo said it's already jumped on the trend toward smaller, lower-cost laptops. Last year, the company unveiled its line of IdeaPad netbooks, which it says have been well received by consumers and the media.

Overall though, this hasn't been a good fiscal year for Lenovo. In the midst of a severe third-quarter loss, President and CEO William Amelio resigned this past February. Earlier this year, Lenovo broke the news that it would lay off around 2500 workers as part of its restructuring plan.

Lenovo joins other PC makers shaken by the recession. On Tuesday, Hewlett-Packard reported lower sales and earnings for the second quarter. In February, Dell announced that its sales fell almost 50 percent for the fourth quarter of 2008.

Updated at 6:25 p.m. PDT with comments from Hewlett-Packard.

Longstanding latent demand for PCs packing a new version of Windows is set to be unleashed, following Microsoft's nod Monday for a holiday release of Windows 7.

Laptop shipments should get a boost from Windows 7.

(Credit: Hewlett-Packard)

"There's a lot of pent up demand for Windows, particularly in corporate, which by and large passed on Vista," said Roger Kay, president of Endpoint Technologies, a market research firm. "Dell and Lenovo should be relieved."

PC sales ground to a halt in the fourth quarter of 2008, after several years of consistent 15 percent quarterly growth, according to an IDC report issued earlier this year.

Windows 7 could change that. "The holiday timing will, of course, benefit consumer-oriented (PC makers) like HP and Acer," Kay said.

Windows 7 may also slow the migration to Apple's operating system. "Defections to Mac may slow. So, Apple won't be entirely happy," Kay said.

And how big is Windows 7 for hardware makers? "Win7 will have the fastest adoption curve of any new rev since Windows 95...I think you'll see adoption earlier than usual in commercial because the code is so stable. The old adage about waiting for SP1 (Service Pack 1) may not be as relevant this time around," he said.

Intel--whose processors will power the lion's share of Windows 7 PCs--is upbeat. "Our early testing is showing improved battery life for consumer notebooks, so Windows 7 should continue to improve the consumer experience," said Jeff McCrea, vice president of Intel's Consumer PC group, in response to an e-mail query. McCrea added that Intel's processors and chipsets work well with the initial beta version of Windows 7.

Hewlett-Packard is working closely with Microsoft, looking toward Windows 7 upcoming release. "We are working closely with (Microsoft) as they develop Windows 7 to make sure our customers can take full advantage of the latest features," HP spokeswoman Anne Finnie said Monday.

And PC graphics chip suppliers like Nvidia have been finessing their Windows 7 drivers in anticipation of a release of the operating system. "Windows 7 users now have the absolute latest in performance and support," said Dwight Diercks, vice president of software engineering at Nvidia, in a statement, referring to various technologies Nvidia is now supporting in Windows 7.

Lenovo announced an internal overhaul Wednesday, reorganizing both its regional and product groups.

Think products, like the iconic ThinkPad and the desktop ThinkStation, will be separated from the Idea group, which makes the IdeaPad and IdeaCentre PCs. The Think group will focus on commercial customers as well as high-end small and medium businesses (SMB). The Idea group will target consumer and SMB transactional customers.

The reorganization also spawned two new business units: one that targets mature markets, and another that targets emerging markets. They will replace the current business units that focus on specific regions. Lenovo considers the U.S., Canada, Israel, Australia/New Zealand, and Western Europe mature, while Africa, Asia Pacific, China, Eastern Europe, India, Pakistan, Korea, Taiwan, Turkey, and the Middle East are emerging.

The reorganization is the latest change at the Chinese company, which has been hit hard by the faltering global economy and resulting drop in IT spending. Lenovo lost $97 million last quarter--which resulted in the CEO stepping down, and the laying off of 11 percent of its workforce--due partly to the fact that it is so heavily invested in large commercial customers.

In an interview with CNET News last month, Lenovo COO Rory Read said the transactional business had slowed down more than expected, and that he hoped to grow the consumer business to more than the current 25 to 30 percent of sales it already accounts for.

The global financial crisis has caused many of the largest technology vendors to rethink how they approach the market. At Lenovo, that has meant changes at the very top of its business. Last week the Chinese PC maker announced it had cut ties with Bill Amelio, its CEO of three years, and installed company chairman Yang Yuanqing as the new chief executive.

Lenovo co-founder Liu Chuanzhi was brought back as company chairman and in one of the first interviews after the changes were announced, commented that his company would be refocusing its efforts on China and other emerging markets for computers.

Rory Read, Lenovo president and chief operating officer

(Credit: Lenovo)

But it now appears he didn't mean it would do so at the expense of the rest of the rest of the markets it plays in. New President and COO Rory Read, promoted last week from vice president of operations, seemed to downplay Liu's comment in a conversation Wednesday with CNET News. The IBM veteran insisted that the company's overall strategy would not be shifting dramatically.

"What's changing here is more about taking ourselves to the next level. I don't think the fundamental strategy changes in a significant way," said Read.

Since Lenovo bought IBM's PC business, management has worked to integrate the two companies and increase its presence beyond Lenovo's foothold in Asian markets to be a global PC vendor. The company has grown to become the fourth-largest PC maker, shipping 7.2 percent of all PCs worldwide as of the fourth quarter of 2008, according to IDC. That's down from 7.5 percent during the fourth quarter of 2007.

But that small dropping of share belies larger issues. Lenovo was bested by rival Acer in the battle for Europe's Packard-Bell brand a year ago in its attempt to grow its worldwide market presence, and recently reported a disappointing quarter as it's been hit hard by the tightening of IT budgets worldwide.

As the company turns the page on its leadership, much has also been made of Lenovo, at heart a Chinese company, bringing a Chinese leader back to the helm. But Read says he believes Yuanqing's potential for success has more to do with his vision than where he's from.

"When you bring Yuanqing into the role of CEO, has got a great strategic view as to how we want to leverage this business model and how we want to do this with speed and velocity," Read said. "I think he understands the various strengths of (Lenovo's) various business models."

What we won't see is Lenovo backing off from the world stage, Read said. Lenovo currently does more than 50 percent of its business with international customers, and that won't change with the new leader. "I think this is more of a natural evolution as opposed to some kind of radical change. This is the next step in that migration."

Lenovo lost $97 million last quarter--which resulted in the laying off 11 percent of its workforce--due partly to the fact that it is so heavily invested in large commercial customers and because its transaction model business in China, which targets small and medium businesses that look for aggressive pricing, "have slowed down a little bit faster" than some of the other segments in the industry. "So we might have experienced that pressure from this downturn a little bit earlier than some of the others," Read said.

One of the things Lenovo is counting on is its nascent consumer business outside of China, which launched the IdeaPad notebooks and IdeaCentre desktops in 2008. Already expanded through parts of Western Europe, North America, and Latin America, Read says he does hope to grow the consumer business so it accounts for more than the current 25 to 30 percent of the company's sales.

"We'd like to do more but we'll do it prudently as we enter different markets so we can do it in a cost-effective, efficient way."

One segment that Lenovo has high hopes for is the burgeoning Netbook market. Lenovo has one model, the IdeaPad S10, which sells for $439. Read says his company sees Netbooks as a primary PC in some emerging markets, but for most customers, a secondary PC with limited functionality but maximum mobility. He sees Netbooks as part of a larger ecosystem of devices that allow people to access their data everywhere, part of the "always-on" computing concept.

While industry observers worry that the focus on Netbooks by large PC makers are cannibalizing traditional notebooks, Read apparently does not.

"I'm not concerned about that," he said. "I think that consumers take the time to understand the product set...I think Netbooks is not a 'cheap PC.' Netbooks is a solution that allows customers to do a set of work activities and productivity items that allows them to be efficient: e-mail, Web access, some light application work."

To be sure, cannibalization is probably less of a legitimate concern for Lenovo, whose notebooks are generally priced in the premium range, than for the Dells and Hewlett-Packards of the world that offer more budget-oriented notebooks very close to the same price point as Netbooks.

In Netbooks and other emerging aspects of the PC market, Lenovo plans to be aggressive despite prevailing economic winds. "We'll look for new opportunities as this market continues to evolve," said Read. "We're not going to retrench in the sense that we're going to hope that this market blows over. We see it as the opportunity to position ourselves and capture the upper hand as the market begins to turn."