lenovo i323.jpgLenovo is battling for the low ground in China's highly competitive mobile phone market. The Chinese electronics giant, best know in the west for its PC business, last year became the leading domestic player in China's mobile phone market, surpassing Bird. But with a market share of 7% it still lags western giants like Nokia and Motorola.

Following years of runaway growth, China's mobile phone market is now developing more slowly and both domestic and foreign manufacturers are finding it hard to build a sustainable advantage in what has become a cut-throat business.

Lenovo's new strategy apparently is to compete aggressively in the low-end of the market, which is where the volume growth can be found. To this end, it has adopted the imaginatively named LoCosto single-chip platform from US chipmaker Texas Instruments for its latest low-end handsets.

The LoCosto technology is at the heart of the new i323 phone (pictured) and it has been developed by TI to lower overall system costs through reduced component count, so allowing manufacturers to produce sleek yet affordable phones.

For the technically-minded, LoCosto has integrated multimedia capabilities, including 15 frames-per-second MPEG4 record and playback, VGA and megapixel camera and MP3 music player,

TI's low-power LoCosto device also extends battery life, an important feature for consumers in regions that often lack a reliable power source. More on LoCosto on TI's website here.

As well as the i323, another five Lenovo handsets use the LoCosto technology and additional models based on the single-chip platform will follow this year.

The big foreign manufacturers in China are also targeting the low-end, recognising that growth is likely to slow first in the mid-range and high-end segments, which they traditional dominated. Sony-Ericsson recently won a big order from China P&T Appliances, the largest handset distributor in China, covering 5m handsets, around 60% of which will be mid-range and low-end models — see this EngagingChina story for more.

Lenovo Mobile originally began as a JV between Lenovo Group and Xiamen Overseas Chinese Electronic Company, but Lenovo bought out its partner in 2005 when the performance of Lenovo Mobile began to improve.

Unlike the no-name domestic players that crowd China's low-end handset market, Lenovo Mobile enjoys good brand recognition so if anyone can give the foreign giants a run for their money, it probably can.

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