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updated 8/3/2007 11:16:14 AM ET 2007-08-03T15:16:14

Lenovo Group Ltd. said Friday it will sell a basic personal computer aimed at China's vast but poor rural market and priced as low as $199.

Lenovo's announcement follows rival Dell Inc.'s bid to boost its presence in China's booming market with the unveiling in March of a low-cost personal computer meant for novice Chinese users.

Beijing-based Lenovo, which acquired IBM Corp.'s PC division in 2005, is expanding abroad but is eager to maintain its dominance in China, where research firm Gartner Inc. says PC sales grew by 23 percent last quarter.

"Our focus is to get down to the rural market," said company spokesman Jay Chen.

The new Lenovo unit will include a processor and a keyboard and will use a buyer's television set as a monitor, Chen said. He said he had no details on the processor size or other features.

The new PC goes on sale later this year at prices of $199-$399, Chen said.

Lenovo is the world's third-largest PC manufacturer, behind U.S.-based Hewlett Packard Inc. and No. 2 Dell.

Dell, based in Round Rock, Texas, announced in March that it will sell a basic desktop PC designed for China and priced at $223-$515.

Chen denied that Lenovo was responding to Dell's initiative. He said Lenovo has been selling a low-cost PC loaded with educational and other software meant for rural Chinese families since 2004.

"It's a natural evolution. We are not responding to our competitors," Chen said. "After three years of market development in low-tier markets we have gained experience and understanding."

Some 800 million people live in China's countryside, where incomes average about $560 a year but are rising at an annual rate of more than 10 percent.

Lenovo said it will set up a rural sales network of 5,000 dealers to reach farmers and other customers.

On Thursday, Lenovo reported a 12-fold jump in profits in the quarter ending June 30, with earnings of $66.8 million on revenues of $3.9 billion.

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