PC maker Lenovo has used a basement price strategy in China to become the country's second largest tablet vendor, coming ahead of rivals offering Android-based products, according to research firm IDC.
In this year's first quarter, Lenovo had a 17.2 percent market share of China's tablet market, according to IDC, with Samsung trailing far behind with a 3.8 percent share. Among Android-based tablets sold in the country during the quarter, Lenovo's reached a 48.2 percent share.
The market share of the PC maker's tablets is still far behind that of Apple's iPad, which shipped almost 1.2 million units in China in comparison to Lenovo's 316,000 units at the end of the quarter. But on Wednesday, Lenovo CEO Yang Yuanqing said during an earnings conference he wanted the company tablet's market share in the country to reach more than 20 percent in the new fiscal year.
Lenovo's tablet shipments have risen in part because the company used a low-price strategy similar to Amazon's Kindle Fire, said IDC analyst Dickie Chang. For instance, one version of Lenovo's LePad A1 comes with a 7-inch touchscreen, has only 2GB of storage, and is priced at 1,000 yuan (US$158). Lenovo also offers another version of the LePad A1 with 16GB of storage for 1399 yuan ($221).
China is also Lenovo's home turf, where the company has remained the top PC vendor in the country for over a decade. The company benefits from a strong brand image, along with an extensive sales channel that can reach China's smaller cities, Chang said.
"Lenovo is the number one PC brand in the country and people trust the brand," Chang said. "People who haven't had a tablet before, they will start with a cheap one, and Lenovo's tablets are priced very reasonably."
In contrast, Apple's iPad starts at 2,988 yuan in China. The company is also in the midst of a trademark dispute over the iPad name in the country, and has yet to begin selling the newest version of its tablet in China.
Chang, however, cautioned that IDC's data only accounts for official tablet sales in the country. If the large number of iPads sold through China's unofficial gray market are included, Apple's share of tablet shipments will be higher.
China began outpacing the U.S. last year to become the world's largest PC market, according to IDC. But the country's tablet market is still fall far behind the U.S. For this past first quarter, China saw 1.8 million official tablet shipments, according to IDC. The U.S. in contrast had 6.8 million tablet shipments, about 64 percent of which were Apple's iPads.