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Ever since Lenovo purchased IBM’s PC business, there have been concerns that this merger might make Lenovo besieged in overseas market. Pessimistic this might sound; Lenovo’s dominance in the domestic market might be challenged as well if global giants get united and launch price wars against it. Lenovo’s Q3 report shows though its sales revenue reached US$3.7 billion, its net profit rate is a mere 1%. By contrast, Hewlett-Packard’s sales figure hit US$7.82 billion and its net profit rate is 4.3% in the quarter ending by October 31st 2006. How about Dell? Its net profit rate topped a sheer 5.7% in the latest quarter. HP and Dell’s high profits make it quite possible for them to give Lenovo a heavy blow by lowering prices. It seems that the price war has already begun in the domestic market: last year HP lowered the price of one of its laptops to RMB4,999 and launched a pack of desktops with only RMB2,999. It is said that HP will use the same strategy to expand its low-end market share, which used to be in the firm control of Lenovo. To Lenovo, challenges from the domestic market are unavoidable. But its killer rivals may actually come from the remote overseas market.
Lenovo has dominance in the domestic market might be challenged as well if global giants get united and launch price wars against it By contrast, Hewlett-Packard’s sales figure hit US $ 7.82 and its net profit rate is 4.3% in the quarter ending by October. 31st 2006. How about Dell? Its net profit rate topped a sheer 5.7% in the latest quarter. HP and Dell’s high profits make it quite may for them to give Lenovo a heavy blow by lowering prices. It seems that the price war has already begun in the domestic market: last year HP lowered the price of one of its laptops to RMB4,999 and launched a pack of desktops with only RMB2,999. It is said that HP will use the same strategy to expand its low-end market share, which used to be in the firm control of Lenovo. To Lenovo, challenges from the domestic market are unavoidable. But its killer rivals may actually come from the remote overseas market.