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Best Buy, Lenovo Announce Retailing Deal

Lenovo and Best Buy (BBY) are aiming for a larger share of the small- and medium-sized business audience, announcing a partnership Tuesday to sell its notebook and desktop computers at Best Buy's business-oriented stores.

Chinese computer maker Lenovo Group Ltd. will market its ThinkPad notebooks, ThinkCentre desktops and new line of Lenovo brand 3000 PCs — as well as other Lenovo products — at 135 Best Buy for Business stores and through Best Buy Co. Inc.'s Internet and telephone order services.

The Best Buy For Business locations are specialized departments within some of the chain's nearly 750 stores nationwide. They serve small- and medium-size companies with specialized technology, installation and support.

Scott Smith, president of Lenovo Americas, said the partnership will help the world's third-largest computer maker "reach an increasing number of users who are turning to in-store experts for their small business IT needs."

In February, Lenovo Group introduced its first Lenovo-branded computers to be sold outside its home base of China. It included two lines of desktop computers, starting at $349, and a laptop line that starts at $599.

The series, targeted at small businesses and consumers, is Lenovo's first brand foray in the United States and other countries since it completed its purchase of IBM Corp.'s (IBM) ailing PC business last May.

Tuesday's announcement marks the return of Lenovo to retail sales in the United States.

A decision by IBM's personal computing division to abandon that market in 1999 ultimately hurt the company as private consumers began to account for more and more sales.

"They really lost a lot of visibility, because there was really no place you could go to see a ThinkPad after that," according to Roger Kay, with the Massachusetts research firm Endpoint Technologies Associates.

Lenovo and Minneapolis-based Best Buy noted that research firm IDC is projecting an increase in sales to U.S. companies with fewer than 100 employees.

Lenovo wants to capture a bigger share of that marketplace, where it currently ranks behind Dell Inc. (DELL) and Hewlett-Packard Co. (HPQ).

In the fourth quarter of 2005, Lenovo had a 7.2 percent market share, compared with Dell's 17.2 percent and HP's 15.7 percent, according to IDC.

While the partnership between Lenovo and Best Buy targets the business market, the placement of sales centers within branches of the nation's biggest electronics chain can also help Lenovo build its identity with private consumers.

"There's nothing to prevent a consumer from actually buying one," Kay said. "It really is setting up Lenovo to sell to consumers at some point. ... They could turn on the consumer version of this just by turning a spigot."

Lenovo moved its headquarters from Beijing to Purchase, N.Y., last year and is currently moving again to Morrisville, outside Raleigh.

Best Buy's new relationship could bode well for its future expansion. The company announced last month that it would open its first test store in China within a year, marking its first retail foray into a country where it already has three offices for buying goods.

"This could become a fruitful partnership and the shoe could be sort of on the other foot in China, where Lenovo could sort of play host to Best Buy," Kay said. "Lenovo's relationships in China shouldn't be discounted — they're extremely strong, and they could help Best Buy decrease the amount of time it takes to establish itself there."