Wednesday, April 9, 2014

Lenovo Calms Server Team After Rivals Question IBM Deal

There is a lot of uncertainty over Lenovo's acquisition of IBM's server business, so much so that other companies are taking shots at IBM, trying to cause confusion and anxiety among employees and investors. However, Lenovo is taking measures against such things and even released a memo to its server sales team, urging them to ignore any "uncertainty and doubt" that rival companies are trying to sow over the decision.

According to the memo, "As the old saying goes, those who live in glass houses, shouldn't throw stones." The memo doesn't single out any company in particular, though Lenovo is probably referring to HP CEO Meg Whitman. Whitman had stated on two separate occasions that she hopes to take advantage of uncertainty surrounding not only Lenovo's acquisition of IBM's server business but also of Dell making itself private.

According to a statement by Whitman at a financial conference, "I have to say, we look like the paragon of stability in the industry right now and we aim to capitalize on that." Lenovo announced way back in January that it was buying IBM's x86 server business for a cool $2.3 billion. Upon completion of the acquisition, Lenovo stated that it had hoped to recreate the success it had integrating IBM's PC division. Lenovo bought IBM's failing PC business back in 2005 and has subsequently become the world's largest PC maker.

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According to Lenovo's internal memo, it is the other server makers that are unstable. According to Executive Vice President of the Lenovo Enterprise Business Group Gerry Smith, "Our competitors in the enterprise space are both in the midst of major corporate transitions. As their customers try to avoid the real uncertainty and doubt created by those upheavals, you should feel very confident in representing Lenovo and the great products and services we offer."

Lenovo went on to say that it plans on keeping IBM's x86 server business intact and continue offering customers the same products, service and support. "Most important, we are committed to IBM's product roadmap, and will extend support end-of-life for any current product offerings. We bought this business with the promise of continuity to customers, both ours and IBM's," Smith wrote in the memo.

Lenovo's current product line consists primarily of one and two socket servers purchased by SMBs (small to medium sized businesses). Lenovo was the world's 9th largest server vendor in Q3 of last year. In that time the company shipped 57,929 units, which is a poor stat compared to HP's 669,000 units. With this acquisition, Lenovo enters into the proverbial big leagues of the serer market. IBM is the second largest server vendor in the world, only slightly behind HP.