IBM and Lenovo executives are bullish that the $2.3 billion sale of IBM’s x86 server business to Lenovo, announced today, is good for channel partners and offers the potential for them to expand business opportunities with customers.
But which customers?
As Tom Rosamilia, senior vice president for IBM’s Systems and Technology Group, made clear in a media teleconference today regarding Lenovo’s plans to acquire IBM’s x86 server business, the move is another example of how IBM continues to transform its business to lead major shifts in technology and remixes its portfolio to focus on higher-value products for enterprise clients.
In particular he referred to recent news regarding the formation of a new Watson business unit — the IBM Watson Group — dedicated to the development and commercialization of cognitive computing, as well as the opening of 40 data centers in 15 countries, a $1.2 billion investment to expand its global cloud computing infrastructure based its acquisition of SoftLayer Technologies Inc. in July 2013.
“We’re continually investing in innovation and are making Watson technology available in the cloud as a development platform for the worldwide community of software application providers,” Rosamilia said.
With the Lenovo/IBM x86 server sale – which includes 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 — IBM can focus on system and software innovation in strategic areas such as big data analytics, cloud and security, the company noted.
Peter Hortensius, senior vice president and president for the Think Business Group with Lenovo, said: “Lenovo’s track record in working with the channel speaks for itself. We are a very channel-focused company, and the feedback we’ve gotten early on from our channel partners has all been very positive. And we have a number [of partners both IBM and Lenovo] do business with, and a number of IBM-unique or Lenovo-unique [partners], and this provides opportunity for all of them.”
Today’s Lenovo/IBM x86 server announcement wasn’t unanticipated for IBM Premier Business Partner Mark Wylie, CEO of Flagship Solutions Group, located in Boca Raton Fla., who has been hearing rumors of such a move since last year.
“It’s a logical shift for IBM away from what is historically a lower-margin business and frees up resources to focus on growth in emerging business markets, or non-hardware-intensive business,” he said.
While Flagship has been a big PureFlex partner for IBM and will be impacted by today’s announcement, the details of which are unclear at the moment, according to Wylie, the company also offers cloud computing solutions and put in one of the first software orders for SoftLayer when it became an IBM company.
“We work with companies that have hybrid cloud implementations and companies that have no on-site equipment at all who began their software development on Amazon cloud. I expect many of these companies will move to SoftLayer because it’s more enterprise-class,” he said.
Flagship is also working with a medical company and the Watson Group to determine what intelligence information can be gleaned from more than 10 million medical records for use in the future.
With little detailed information to go on as to how the x86 server business sale impacts channel partners, it’s a wait-and-see situation. According to Hortensius, the transaction could take another six to nine months to close.
While there were few details about the impact of the sale on IBM’s channel partners, IBM and Lenovo did note that that they plan to enter into a strategic relationship that includes a global OEM and reseller agreement for sale of IBM’s entry and midrange Storwize disk storage systems; tape storage systems, General Parallel File System software; SmartCloud Entry self-service portal; and elements of IBM’s system software portfolio, including Systems Director and Platform Computing solutions.
“We know IBM will OEM to Lenovo but will I, for example, be able to order in the Flex system using an IBM part number even it’s provided by Lenovo?” asked Wylie, noting that it’s too early to tell how things will pan out.
Still, IBM and Lenovo are bullish that today’s announcement is good news for channel partners, pointing out that there’s already overlap between what Lenovo has in its PC and server business and how IBM goes to market in System x.
Rosamilia said that today’s announcement exposes a more extensive portfolio and more opportunity for partners.
“Lenovo has products on the lower end of the scale that we don’t have and allows us to have a broader portfolio going forward with our channel partners. Also, IBM has a full network of value partners and value distributors and now we have a better set of capabilities, flexibility and ease of doing business that we’re able to capture for better performance with them,” he said.
Stephen Leonard, general manager of sales in IBM’s System and Technology Group, added that today’s announcement presents a great opportunity for channel partners to extend their business around both Lenovo and IBM products, such as the Power Systems, mainframe and storage products.
“We believe that the combination of these two things will strengthen the position our channel has in the marketplace and will give them the ability to compete much more [broadly] and deeper in the markets they serve and add more value to the clients that they support, he said.