Lenovo’s struggles in data centres

Image: IDGNS

9 August 2017

Lenovo has done a bang-up job in taking over IBM’s old PC business and turning it into a rousing success. Or at least as much of a success as can be had in an era of declining PC sales. However, it has not seen quite the same level of success with the server business.

Lenovo picked up IBM’s x86 server business in 2014 after some grumbling and consternation from the US government. As the US government and military had quite an installed base of IBM servers, it was not keen on the Chinese taking ownership of them. The deal went through after some assurances, but that now looks like the least of their problems.

Share drop
According to Gartner, in the first quarter of 2017, Lenovo sales fell 16% and its market share dropped to just 5.8%. Lenovo was fifth, behind HPE, Dell EMC, IBM (which is only selling Power-based RISC systems and mainframes) and Cisco. In fact, Lenovo had been ahead of Cisco in terms of units sold. When falling behind Cisco in servers, a business Cisco did not even enter until a decade ago, it is clear that there is a problem.

Now partners are expressing concern over the departure of the company’s North American president, Emilio Ghilardi, after just 18 months on the job. Ron Venzin, partner at Focal Point Solutions Group, summed it up with this comment to CRN: “When customers look at Lenovo, they see desktops and laptops. They don’t look at Lenovo in the data centre.”

Even more damning was this comment from a solution provider: “When I lay out OEM partnerships, when I mention Lenovo, the customer says, ‘No, I don’t want anything to do with that. They’re a Chinese company.’ The Chinese are known for reverse engineering technology. It’s purely political.”

How does Lenovo, with its massive US office in North Carolina, overcome that?

Turning things around
That is not to say Lenovo is not trying. In June, it introduced 26 data centre hardware products, covering servers, storage and network switches as part of two brand launches, ThinkSystem and ThinkAgile. The company has also introduced new software-defined infrastructure and struck a deal with SAP to run HANA applications on Lenovo hardware.

Also, Lenovo scored a big get when it hired Kirk Skaugen to be president of its data centre unit. Skaugen was a heavy-hitter at Intel and might have been a contender for the CEO position. He did great things with the data centre group, although he was also just selling chips, not systems. Lenovo also hired former Intel CIO Kim Stevenson to be general manager of the data centre unit.

For now, Christian Teismann, senior vice president and general manager of its enterprise business segment, will serve as an interim chief until a replacement is found for Ghilardi.


IDG News Service


Read More:

Back to Top ↑