IBM Licenses Server Technology To Lenovo

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Todd Barrett, director of sales for the security and networking division of CPU Sales and Service, a Waltham, Mass.-based Dell and Hewlett-Packard server partner and Lenovo mobile PC partner, said that Dell and HP are both very entrenched in the server market.

"It's very competitive," Barrett said. "Everyone seems to like them, especially HP servers. It's tough to break into this entrenched world."

While CPU sells Lenovo's ThinkPad mobile PCs, Barrett said he expects Lenovo server sales to be an uphill battle for mindshare. "I'm not interested in going out and starting with another server product line," he said.

Hume said that the agreement between the two vendors has incentives to prevent the two companies from bumping into each other, but he declined to discuss details. "Lenovo will be focused in markets we're not in," he said. "And Lenovo's reach into tier-two customers is broader than our own. This agreement should allow our business partners to expand their reach."

Lenovo, which in late 2004 acquired the PC Division of IBM, including the ThinkPad line of mobile PCs, already has its own line of x86-based servers, but is currently selling them only in China. With this agreement, Lenovo will make its new IBM technology-based servers available worldwide.

When Lenovo decided to expand its server business, it could have used its own server technology as the basis for that expansion in light of the fact that servers have become a commodity business.

Marc Godin, vice president and general manager of Lenovo's server business unit, acknowledged that this is indeed the case. However, in response, Godin only said that IBM was the right partner.

"The advantage of working with IBM's technology is that it is an effective and proven technology worldwide," he said. "We're getting access to a line that is manufactured and sold around the world. We concluded that they were the right partner for us."

Both IBM and Lenovo said that, contrary to what some industry watchers believe, the two vendors never put in place an agreement restricting Lenovo from selling servers outside of China. "There's nothing in our legal agreement to stop Lenovo from bringing servers in," Godin said.

At the end of the day, the big question is, why doesn't Lenovo introduce a line using its own technology, Venero said. "It would be a challenge for them vs. taking a known technology into accounts," he said. "It's like in mobile PCs, where it's easier to walk in the door with a ThinkPad than, say, a Lenovo 3000."

For IBM, it is a chance to expand it business with Lenovo, Venero said. And Lenovo gets in the door by talking the IBM brand. "And maybe Lenovo can eventually use it to bring in their own server technology," he said. "Just look at the ThinkPad. Lenovo is now bringing in its own line as well."

How the agreement affects the channel will depend heavily on the difference between the two vendor's server lines. "What's going to be the price delta?" Venero said. "Is this going to be a price war? If there are two identical server boxes, one branded IBM, one branded Lenovo, what's the delta? IBM has more overhead in general."

Details about pricing and packaging were not discussed by IBM or Lenovo, as the first products from the relationship are expected to be rolled out late this year, with general availability expected to start in the first quarter of 2009.

The IBM/Lenovo technology licensing agreement is slated to last for four years.

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