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When we spoke at CES 2010, you said you believed that netbooks, which were hot at the time, weren't a threat to the core notebook market and that netbooks would eventually blend into the overall laptop category. That prediction looks pretty good now, especially since netbook sales have slowed. What's your perspective, then, on the tablet market?
I personally believe that tablets will eventually settle in around 14 to 18 percent of the overall PC market; and that's tablets that are in a PC-style space that are doing real work. I'm not counting people that are using tablets as e-readers. In each market, there's a surge of activity around a new technology and then it comes down to water level and becomes more standard. I think the form factor is important, and I think it will play in consumer, small business and enterprise segments. But it's not going to be dominant form factor at any time. It's not going to happen. There will be other solutions down the road, plus there are benefits to things like ultra-thin notebooks or clamshell devices with additional input devices. So yes, tablets will be an important form factor. But in fact the more important trend isn't about the physical form factor -- it's the convergence that these devices are driving across the operating systems and processors.
Think about the impact that Android and ARM have had on the ecosystem. The proprietary control points of today's ecosystem have to come under pressure now. It's not unlike the Internet and TCP/IP 15 years ago when proprietary networking protocols like SNA and mainframe systems dominated the landscape, and people said "Oh, the mainframe is dead. The server is dead." Well, it was quite the opposite. Since that time server volumes have exploded. In fact, the proprietary control points adjusted and changed and price points also changed, which fueled an explosion in innovation. I think we're going to see that same kind of explosion created by this convergence over the next 3-5 years.
And it's not the death of the PC – quite the opposite. When those price points and control points change, it's going to open up the ability for 3 billion people additional in emerging markets to obtain the technology. That's a lot of people. And let's say my math is off and I'm only a quarter correct; that's still 700 million to 800 million more people that have to have that technology. And that's what's going to fuel this next expansion. And that's why emerging markets are so critical, and why Lenovo is number one in a lot of those markets like China, India, Latin America, and Russia. If we can capture that scale, then that means the price points and value gets better for everyone here in North America and across the planet. So I think that's the more interesting discussion than the physical form factor of tablets. Tablets are important, don't get me wrong. But they've been around for 10 years, and it's just that we're seeing a different solution today with touchscreen capability and other features at a different price point. That's going to evolve, and you're going to see tablets blur into the traditional PC space.
Lenovo has spent a lot of time at this event promoting its dekstops. Partners obviously know the ThinkPad brand but you're now trying to expose them to other product segments, particularly desktop systems. How will you achieve that?
I think what's key is the partner relationship. If you create a synergistic relationship based on mutual respect and value to each other, I think that opens the door for ever-expanding business opportunities in both directions. I think putting in place our protect & attack strategy almost three years ago and executing consistently so the partners know and trust we're there for them is crucial. We're not going to acquire some large services business to compete with them.
Together, we and the business partner create a better solution for the end customer. That rings true for them. And I think the resellers here at the event are seeing that. And once they see that, then they're willing to explore more opportunities. Based on that, they say "Okay, your laptops makes a lot of sense, you have great technology there – let's now move to desktops or tablets. Here's a vendor partner that we know and can relate to and can be successful with." And they know that our products stand for high quality, innovation and great value. That's going to be the same whether it's notebooks or desktops. So we really want to be that client provider across the portfolio. And I think it's a natural time for this show and for expanding into the desktop area.