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August 27, 2010 4:58 pm

Lenovo plans to sell video game consoles

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Lenovo plans to start selling its own video game console in November, the latest move by the company to broaden its product portfolio beyond PCs and which will put the Chinese company in direct competition with Sony, Nintendo and Microsoft.

The Ebox, as it is called, is developed by a Lenovo affiliate called Eedoo amid hopes that China could relax restrictions on game console sales as the government tries to boost so-called “triple plays” – businesses that operate telecommunications, internet and broadcasting services.

So far, neither Sony’s PlayStation nor Nintendo’s Wii or Microsoft’s Xbox consoles have been officially launched in China. One of the reasons has been a ban issued by the Ministry of Culture a decade ago on the sale of video games and accessories in the country as they were considered to be a bad influence on youth.

The ban has not been strictly enforced and all globally available game consoles are readily accessible via the grey market in China, but the bulk of the country’s gaming market is found online.

Mostly young, low-income internet users play multiplayer role-playing games, which allow them to invest little or nothing upfront and only pay to acquire virtual items. China’s online gaming market created revenues of Rmb26bn ($3.8bn) last year, according to Analysys, the Beijing-based research firm.

But Beijing said earlier this year it would allow companies in the telecoms, internet and broadcasting sectors to enter each others’ industry. This is expected to lead to a convergence of applications between different devices such as computers and television sets.

Huawei, China’s largest telecom network equipment vendor, is developing game consoles for IP television use.

So far, the only game console sold legally in China is the iQue, a low-end product made in a joint venture between Nintendo and a local partner.

Microsoft has said it hopes to launch the Xbox in China and is working with the government to achieve this.

Lenovo said its game console project had started as a development effort and been incubated within Lenovo, and Eedoo management and engineers were former Lenovo research and development staff.

Jack Luo, chief executive, told the Financial Times that the company had no plans to see the Ebox outside of China. “China has 120m urban families. We are focusing on 20m users among them,” he said.

He refused to confirm design details of the EBox, which the official China Daily has described as similar to the new Microsoft Xbox 360 which features a motion-sensing technology that tracks the player’s movements without any need for a hand-held control.

After a management reshuffle in early 2009 that brought the company’s founders back in to replace Steve Ward, the American chief executive, Lenovo launched a forceful push into mobile devices. It has since started selling the LePhone, a smartphone rivalling the iPhone, and is set to launch a tablet PC later this year.

Industry sources said venturing out into game consoles could complement this strategy as mobile devices are expected to become more important as platforms for gaming in the future.

It is also part of plans by parent Legend Holdings to foster a series of technology-related start-ups.

Eedoo was spun off from Lenovo earlier this month and is jointly owned by the PC company and Legend.

Additional reporting by Eliot Gao

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