Aug 23, 2012
Lenovo stunned the computing industry earlier in the week by announcing the Think Pad 2, a Windows 8 tablet. So, what, there have been a lot of Win 8 tablets announced especially Microsoft’s (NASDAQ:$MSFT) Surface and Surface Pro. The Think Pad 2 represents something that most of the others announced are not: an acceptance of the challenge that Microsoft laid down with their Surface announcement.
One of the things that has been impressive about Microsoft recently is how quickly they are responding to the market to create noise and guide the Win 8/WinRT rollout. There have been reports that Microsoft had no intention of making their own tablet and rather wanted to set hardware standards with the OEMs to create a minimum consumer expectation on quality. Doing so would leapfrog Google (NASDAQ:$GOOG) and Android and immediately put Win 8 devices on a kind of par with Apple (NASDAQ:$AAPL) and their iPads.
The problem was, the suspicions go, that Microsoft didn’t like what they were seeing from the OEMs and decided to set the bar themselves. They likely also got wind of Google developing the Nexus 7. Surface represents a new road for Microsoft, not just as a hardware vendor, but rather as a company who finally understands how important the proper design of hardware and software is.
In essence the division of labor was too divided for them to succeed.
Even Google’s crazy garden of forked Androids would lead to one two OEMs creating enough brand loyalty (Think Samsung) and solidify Android’s place in the next generation of mobile computing. The head start in this space that Microsoft ceded to Google along with the incompetence of dysfunctional behemoths Research in Motion (NASDAQ:$RIMM) and Hewlett-Packard afforded Google the opportunity to bumble around selling cheap and sub-standard devices for more than a year.
Surface immediately set the computing world on fire. The anti-Microsoft crowd came out and said they were eating their own. The purveyors of Android junk like Acer complained of the competition. Failing commodity producers like H-P shook their fists and is still planning uninspired wasy-to-build ARM-based tablets. It was Dell it was assumed that would be the beneficiary of Microsoft’s staggered launch of the Intel (NASDAQ:$INTC) version of Surface, being the first to market with an x86 tablet.
Not so fast. Lenovo then swoops in and shuts everyone up with a 10 inch tablet with all the bells and whistles that looks good has the new Atom processor and is said to be close in price to the iPad. Keyboard, stylus and other accessories will be options and the thing will ship in time for the Windows 8 launch on October 26th.
What’s important to note is not that the Think Pad 2 is going to blow the world away. It’s important to note which companies are up to, or really capable of, rising to the challenges in this market going forward. ASUS is building the Nexus 7 for Google and has a number of innovative designs for Windows and Android tablets in the pipeline. Lenovo is attacking literally all markets from smartphones, to tablets to SmartTV’s while partnering with EMC to build cloud computing services and performing well above industry averages in all segments. This is a company with $30 billion in annual revenues now.
While everyone else in the computing industry is complaining of flat to declining sales in a difficult market, Lenovo increased Global PC sales in FY 2011 by nearly 44%, raising their market share by 3points to 12.9%. And you wonder why H-P (NYSE:$HPQ) is complaining in Digitimes that they will have problems moving to the cloud, it’s because they are eating H-P’s lunch in every other area right now. Their net margins increased as well. In the most important market for them, being Chinese, is that they are thought of as a premium brand in China.
So, premium branding in the fastest growing markets, lean and efficient global manufacturing with rising sales in all markets gives the Think Pad 2, a product designed to compete in the same place that Dell is looking at and Apple is selling a lot of iPads in, business, a fantastic base from which to launch in October.
The person who should be grinning from ear to ear over this news is none other than Steve Ballmer, for while Surface is an important device for Microsoft, iPad sales are so big right now and the Nexus 7 solidifying Android’s place that Windows 8 will need as many competent and hungry OEM’s producing compelling alternatives to those products to have a chance in the future.
Those that refuse to keep up are going to get crushed.