IBM In Talks To Sell x86 Server Business To Lenovo

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Lenovo is looking to grow its server portfolio to take on x86-based server vendors and in May launched its RD530 and RD630 ThinkServers, which it called its first "enterprise-ready" servers. Lenovo also said its server revenue through the channel grew 76 percent from fiscal 2012 to fiscal 2013.

An executive from an international solution provider that works with both companies expects the deal to benefit server-focused partners. "I think this could be a positive for the channel, since Lenovo does a larger percentage of its business through the channel than IBM," said the source.

According to IDC figures released in March, the x86 server market saw a notable uptick in revenue during the fourth quarter of 2012 due to growing demand for Intel's Sandy Bridge processor. IBM was the top global server vendor by revenue during the fourth quarter with 36 percent share of the market, followed by Hewlett-Packard with 25 percent and Dell with 15 percent, according to IDC's figures.

The IBM-Lenovo server deal could impact the Lenovo-EMC partnership formed last August, due to the frosty relationship between IBM and EMC, sources told CRN. EMC is embedding Lenovo's enterprise server offerings into some of its storage systems, and Lenovo is reselling EMC's networked storage solutions to customers in China. Lenovo also paid an unspecified amount to acquire partial ownership of EMC's Iomega division.

Rumors of IBM selling its x86 server business to Lenovo have been simmering for years. In early 2008, the vendors inked an agreement that allowed Lenovo to build one-processor and two-processor servers based on IBM System x server technology. Lenovo had been selling its own x86 servers in China prior to the IBM partnership.

In early 2009, amid mounting rumors of IBM exiting the server business, one of the company's executives tried to quell the speculation. "Let me be clear ... IBM is not exiting or selling its x86 server business," Adalio Sanchez, general manager for System x in IBM's Systems and Technology group, said in a memo to IBM partners.

IBM sold its PC business to Lenovo in 2004 for $1.25 billion and took an 18.9 percent stake in the China-based vendor. In that deal, IBM became Lenovo's primary services and customer financing provider, and Lenovo became the preferred supplier of PCs to IBM.

At the time, IBM agreed to let Lenovo continue using the IBM brand on ThinkPads for several years, but Lenovo switched to its own branding in 2007.

IBM is holding its Edge 2013 conference in Las Vegas from June 10-14, and one of the sessions will feature information about the "latest IBM Storage, System x and PureSystems product enhancements," according to a session description on the event website.



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