Can Lenovo succeed in a crowded server market?

Palm Springs, Calif. – Lenovo’s chances of becoming the No. 1 vendor in the server market are…

Well, if I were to handicap it I’d say they are 50/50. Today, at the Fall VTN Invitational conference presented by Ingram Micro, Kevin Nelson, the executive director of Lenovo’s enterprise systems division clearly stated to the VentureTech Network audience of North American channel partners that Lenovo’s goal is to become No. 1 in servers.

“Our goal is to be largest server vendor in the world in next five years. I know, it’s a big, hairy, audacious goal,” Nelson said.

Preventing Lenovo from attaining this goal are: 1. HP, 2. IBM, 3. Cisco, 4. Oracle, 6. Dell, 7. Intel, 8. Super Micro Computer, 9. Acer, 10. NEC.

In case you missed it No. 5 was not listed. That’s because it is currently occupied by Lenovo, according to NPD Group figures. Not bad for a company that just got started selling servers 20 months ago. Given that there are no previous results to base Lenovo’s performance in the server market; let’s just say it’s a good start for the Chinese-backed vendor.

If you acknowledge that Lenovo is growing its base in the server market than you must also consider Dell, Cisco and IBM in that mix because each of those vendors are growing. HP did decline but they have half the market right now. Oracle’s strength is that its niche so they will more than likely remain where they are. The bottom four are barely on the radar screen.

Nelson said that the company was overjoyed to be No. 5.

“If you were asked, five years ago, to bet on Lenovo becoming the No. 1 PC vendor. Would you have made that bet? Well, no one bet on us,” Nelson added.

But, while becoming No. 1 in PCs is a great accomplishment you have to understand that the other server vendors do not care that much about PCs. The real money is in servers and storage. So the fight on Lenovo’s hands is going to be way more ferocious than in PCs.

Nelson admitted that the market is crowded and that they do not wish to get into a “knife fight” with HP, Dell, Cisco and IBM.

Lenovo is going to take, what Nelson called, a prescriptive approach and only focus on the sub $25,000 price point. They also plan to leverage the ecosystem of channel partners with hopes of penetrating the lucrative enterprise market.

Again they are getting some traction with VTN members. Nelson said that more than 85 per cent of VTN resellers are selling ThinkServer. Lenovo also enjoyed 156 per cent growth in Q3 server sales with the 332 VTN members in Canada and the U.S.

The EMC partnership is also going to help mainly because they will be buying a lot of servers from Lenovo. The company also opened three manufacturing facilities in North Carolina to complement existing plants overseas.

Another factor to consider is that early on Lenovo channel partners sold servers to donut chains and gas stations, but recently they won deals from Duke University and Staples. That’s a big technical computing win for Lenovo and another win a big-time retail.

Nelson said that Lenovo will be refreshing its entire product line in the next five months that will include a new four-way server, expanded storage and a SAN. That will give the channel another reason to re-engaged customers on Lenovo server technology.

Overall it’s a smart plan from Lenovo that not too ambitious for their size and scope in the market.

Don’t be surprised if Lenovo continues to take share away from HP, but keep in mind HP, IBM, Cisco and Dell all have aces up there sleeve and have not shown there hand yet.

One quick hit before I go. Brent McCarty has gotten another big promotion from Ingram Micro. McCarty, a friend of CDN, is now the vice president of the UK & Ireland region. CDN congratulates him and wishes him the very best.


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Jim Love, Chief Content Officer, IT World Canada

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