IBM Execs Try To Quell Partner Concerns Over x86 Sale

IBM channel chief Marc Dupaquier said the blockbuster sale of the company's $2.3 billion x86 business to Lenovo will not disrupt the business of Big Blue channel partners.

Dupaquier, the newly appointed IBM Global Business Partner general manager, told CRN that the pending sale, which includes x86 servers and the transfer of 7,500 employees, will create new opportunities -- not headaches -- for IBM partners.

"This is not IBM killing off its x86 business. This is IBM passing the baton to a different company," Dupaquier said. "I believe the IBM brands -- System x, Flex and iDataPlex -- will continue to represent reliability and value long after the sale is approved."

Dupaquier said Lenovo will be a boost for IBM x86 partners, allowing them to take advantage of the Chinese vendor's nimble go-to-market strategy, which emphasizes competitive prices and a streamlined supply chain.

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[Related: IBM, Lenovo Execs Answer x86 Server Sale Questions ]

The sale of IBM's x86 server business has Big Blue partners feeling deja vu as they grapple again with a chunk of their business migrating to Lenovo. But while partners applaud the deal, which they say is reminiscent of IBM's ThinkPad sale to Lenovo in 2005, many say this time the stakes are higher and the path to bring their business to Lenovo is far from clear.

One IBM Premier partner, who asked not to be identified, is skeptical Lenovo will be able to absorb IBM's x86 channel partners without major hiccups and said that many questions still need to be answered.

"Lenovo just doesn't have the channel tools and back-end systems in place to make this a seamless transition," the partner said. "What is the transition path? How do we sell IBM Flex with Lenovo chassis? Will this impact my business? Until I hear more granular details about what the transition path is, the jury is still out."

Under the terms of the deal, IBM will continue to provide maintenance services and support on in-scope x86 products directly until the sale closes, and through Lenovo after that. "Customers can expect to see the same level of customer support and the same repair person they know and love today, tomorrow, and long after the transaction is completed," said Adalio Sanchez, general manager of IBM's System x business.

As part of the IBM sale, Sanchez's employment transfers to Lenovo along with IBM's System x senior management team, the entire System x development team, and IBM's System x sales and marketing operations, including channel managers and reps. "Does this impact the IBM channel? No. IBM partners maintain their certification, support and ability to resell the entire IBM product line under Lenovo's flag," Sanchez said.

NEXT: Partner Uncertainty

For the IBM partners CRN interviewed, Lenovo and its channel program are mostly unknowns. When asked about overlap between IBM and Lenovo channel partners, and the number of x86 IBM partners that might become Lenovo partners after the sale, IBM declined to answer.

"I cannot argue with IBM's logic [in selling off the x86 business]. It makes sense for them to follow the industry to the cloud and off-premise computing. But for companies where Intel is still a core part of their strategy it's going to be a hard pill to swallow. For IBM partners like myself, we want to know what Lenovo's long-range plans for embracing the channel are," said Tom Hughes, director of alliances for Technology Solutions Group of Ciber, a Greenwood Village, Colo.-based IBM Premier partner ranked No. 37 on CRN's Solution Provider 500 list.

In an earlier interview with CRN, Lenovo channel chief Chris Frey was reticent to dive into channel specifics for IBM or Lenovo partners: "Once the deal has been approved, I can come back to you and tell you a lot more of how we are going to enable Lenovo/IBM partners ... Certainly a lot is going to be different, and we'll give our partners everything they need to be successful. But it's far too early right now to get specific," Frey said.

One large IBM partner with $2.5 billion in annual sales, who asked not to be identified, told CRN that his shrinking base of IBM x86 business customers are already expressing uncertainty about their reliance on IBM x86 hardware, and say they are considering moving their Big Blue business to rivals such as Hewlett-Packard and Dell. "We are a technology-driven company. We can't make the wrong bet. If IBM has decided to no longer support a product, we need to know. Are there any assurances that Lenovo will maintain the IBM product lines? Is IBM or Lenovo going to offer contract support in 12 months or two years?"

NEXT: Uncertainty Can Breed Opportunity

Chris Pyle, president and CEO of Champion Solutions Group, a Boca Raton, Fla.-based solution provider and IBM partner ranked No. 173 on CRN's SP500 list, said he's waiting to hear from Lenovo to pass final judgment on the deal. "From a channel perspective, I'm anxious to hear about a product road map and how robust the Lenovo channel is," Pyle said. He said customers are already peppering him with questions about IBM x86 server maintenance and pricing post-Lenovo's acquisition.

"This isn't necessarily bad. Our business model is not built on adversity, but change gives us opportunity to make revenue where we might not otherwise. It's like [Microsoft] XP: Our customers know they have to make a change and they are not happy about it. But they know it's something they are going to have to do. For system integrators, this is an opportunity to make revenue. Because, face it, getting told the company you have been depending on for the past couple years is going to be owned by someone new is a crossroad to move them into a new solution," Pyle said. That solution may or may not be built on Lenovo technology, he said.

Pyle and other IBM partners tell CRN that while the deal reminds them of Lenovo's purchase of Big Blue's ThinkPad business, it's an apples-to-oranges comparison. Data center deals involving x86 servers are bigger, more complex, and come with a lot more on the line, Pyle said.

From Dupaquier's standpoint, last week's announcement goes a long way to reduce F.U.D. not create it: "The good news is we announce what we are doing. Frankly, it was of more concern to our customers before the announcement. Now it's clear what product lines will remain and what will be transferred."