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Lenovo looking at acquisitions to expand enterprise unit

Lenovo wants to expand its server unit ouside of China

By Agam Shah
December 4, 2013 04:23 PM ET

IDG News Service - Once heavily reliant on the Chinese market, Lenovo is now looking to make acquisitions as it tries to expand its growing enterprise business to other countries.

Lenovo, widely known as a PC company, started selling bare-bones servers in 2008. The company established its Enterprise Product Group a year ago and now wants to build server, software, networking, storage and software portfolios through acquisitions and partnerships, said Roy Guillen, vice president and general of the Enterprise Product Group at Lenovo.

"If you look at the way our PC business grew, we were not shy of making acquisitions. We added companies that brought scale, they bought presence, they brought intellectual property," Guillen said. "We've been looking at the same thing in enterprise and we'll continue to do so."

Lenovo acquired IBM's PC division in 2005 and earlier this year rumors surfaced that the Chinese company was negotiating to acquire IBM's x86 server operations. Guillen declined to comment on whether negotiations took place.

Lenovo is the world's top PC vendor, but is not yet a significant player in the server market. According to Gartner, Lenovo was the world's ninth largest server vendor during the third quarter this year, shipping 57,929 units, growing from 55,467 units in last year's third quarter. By comparison, the world's top server vendor, Hewlett-Packard, shipped 669,103 units.

"Most of [Lenovo's] server business does come from China, but they did show some decent growth this quarter, albeit from smaller bases, in Canada, Eastern Europe and the U.S. That helped their overall numbers," said Jeffrey Hewitt, research vice president at Gartner.

Lenovo's enterprise products today include single- and two-socket tower and rack servers. The company plans to introduce new two-way servers early next year, and offers a four-socket server in China that it could bring to the U.S. market.

"We're going to have a really big improvement by the Grantley timeframe," Guillen said, referring to the next-generation of Intel's server processors based on Haswell microarchitecture. Those servers will come out in the third quarter of next year.

Lenovo's enterprise strategy is predicated on the flexibility of server offerings and the company wants to offer a shopping list where customers can check mark what they need, Guillen said. That's a different server strategy from top server makers IBM, HP and Dell, which are focusing on converged offerings that package servers, software, networking and storage.

"Even though I could have a converged system ... I bet 70 percent of the market doesn't consume infrastructure in that manner," Guillen said. "We think there's a lot of technology in the supply base that's not owned by Dell, HP and IBM that could help drive the efficiency of workloads much better."

Reprinted with permission from IDG.net. Story copyright 2014 International Data Group. All rights reserved.
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