Lenovo COO Gets Candid: Integrating IBM's x86 Workforce Is Our Biggest Challenge

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Folding IBM's System x practice into Lenovo's fast-paced, cost-conscious environment has proven difficult, Lenovo's chief operating officer said Wednesday. 

"To be honest with you, we have some challenges of our own," said Gerry Smith, COO and executive vice president of Lenovo's PC and Enterprise Business Group. "We have a culture we bought with the x86 business that we're spending a tremendous amount of time re-engineering and reteaching and relearning."

Smith told 300 attendees of the 2015 Global Technology Distribution Council (GTDC) Summit in San Francisco that he wished to be candid about the supply chain challenges and integration issues Lenovo has experienced around its purchase of IBM's $2.1 billion x86 server business, which closed in October.

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Specifically, Smith said Lenovo has been focused on making the IBM server acquisitions mainstream brands where channel partners of all shapes and sizes feel like they can come in, win deals and make money.

"It's about speed to market, and it's about the volume of our go-to-market," Smith said. "It's not just about having cool-looking, high-performance servers."

When Lenovo acquired IBM's personal computer business in 2005, Smith said it took 18 to 24 months to align the IBM culture and strategy with Lenovo's existing ethos and get everyone on the same page. For this reason, Smith cited integrating IBM's x86 workforce -- as well as employees from Motorola's $5 billion smartphone practice -- as the single biggest challenge the Beijing-based vendor is facing today.

"We're almost a year in, and I think we're making progress on that [integrating the acquisitions]," Smith said, adding that Lenovo is committed to aligning the cultures more quickly this time around.

Smith noted that he has devoted 80 percent of his time to Lenovo's enterprise business since the x86 acquisition closed, spending just 20 percent of the time on the personal computer side of the business even though Lenovo is the global leader in PC sales.

Smith acknowledged that the x86 server business has declined for three straight years, although he sees revenue starting to flatten out and expects sales to improve in the long run.

"It's a great market," Smith said. "In the future, we think everything is going to be centered around enterprise."

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