Lenovo-IBM server deal finalized

Lenovo’s enterprise server business is about to get a lot bigger as it closes a US$2.1 billion deal to buy the x86 server and associated lines from IBM.

The deal officially closes Oct. 1, with Lenovo gaining the System x, BladeCenter and Flex System blade servers and switches, x86-based Flex integrated systems, NeXtScale and iDataPlex servers and associated software, blade networking and maintenance operations from IBM.

In a statement the company said that on Wednesday Lenovo becomes the third largest server manufacturer in the world.

“Now, our priorities are to ensure a smooth integration and deliver a seamless transition for customers,” company chair and CEO Yang Yuanqing said in a statement. “By combining Lenovo’s global reach, efficiency and operational excellence with IBM’s legendary quality, innovation and service, I am confident that we will have competitive advantages to help us drive profitable growth and build Lenovo into a global enterprise leader.”

IBM retains the more powerful — and profitable — mainframe and Power Systems, as well as Power-based Flex servers, PureApplication PureData appliances and storage arrays.

In addition to getting the new lines, Lenovo will also be an original equipment manufacturer (OEM) and resell some of IBM storage products. These include IBM’s entry and midrange Storwize storage product family, Linear Tape Open (LTO) products, flash storage arrays and elements of IBM’s system software portfolio, including Smart Cloud, General Parallel File System and Platform Computing solutions.

“Lenovo has big plans for the enterprise market,” Gerry Smith, executive vice president of Lenovo Group and president of its enterprise business Americas groups. “Over time, we will compete vigorously across every sector, using our manufacturing scale and operational excellence to repeat the success we have had with PCs.”

“Our target is to build a profitable US$5 billion enterprise business within a year. This won’t be easy.  We will be tested.  But in the long run, we will make this combination work, and we will build a sustainable, profitable, growing business that is the number 1 enterprise company in the world.”

Not only does Lenovo have to manage swallowing the new server lines, it also has to get a handle on Motorola’s handset business, which it bought from Google for US$2.9 billion days after announcing the IBM deal.




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Howard Solomon
Howard Solomon
Currently a freelance writer, I'm the former editor of ITWorldCanada.com and Computing Canada. An IT journalist since 1997, I've written for several of ITWC's sister publications including ITBusiness.ca and Computer Dealer News. Before that I was a staff reporter at the Calgary Herald and the Brampton (Ont.) Daily Times. I can be reached at hsolomon [@] soloreporter.com

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