Chinese internet giant Baidu will invest more than $100 million in Lenovo’s new smartphone brand that will rely on online-only sales and viral marketing, Leiphone reported.
Lenovo has said it will market smartphones as well as internet connected home devices under the brand name ShenQi, which has been translated as ‘Fancy Maker’ in some English-language reports.
As a condition to the investment, Baidu’s mobile apps/services are likely to be required to be pre-installed on all ShenQi devices, noted Marbridge Consulting. Qihoo had a similar requirement when it invested $409 million for a 45 per cent stake in a joint venture with Chinese smartphone maker Coolpad in December.
Lenovo announced in October it would set up a new company in China to enable it to better compete against the new breed of low-cost, high-spec mobile device makers like Xiaomi. It said it plans to take the new unit public after it launches devices in April.
In its earning report earlier this week, Lenovo said that following its acquisition of Motorola’s smartphone business, it is the most credible challenger to Samsung and Apple. The company said that “unlike many smaller mobile players that rely almost completely on a slowing China market”, about 60 per cent of its devices are sold outside of China.
Total smartphone shipments grew by around 78 per cent to 24.7 million is its fiscal Q3 ending 31 December, driven by “aggressive business expansion in emerging markets outside of China from Lenovo-brand products” as well as a sharp increase in Motorola shipments (up 118 per cent to 10 million units in the quarter).
Lenovo estimates it had a 6.6 per cent share of the global smartphone market by the end of 2014, putting it in the number three position behind Samsung and Apple, and slightly ahead of Xiaomi.