Lenovo explains its server buy

The Chinese maker of IBM cast-offs, Lenovo has been explaining why it thinks that Biggish Blue’s server business could make it shedloads of cash.

IBM disposed of its server line to Lenovo because it could not make much cash out of it. However Lenovo, on the other hand, believes there is ample opportunity for it and partners to continue selling and expanding SMB server market share.

Chris Frey, vice president of North America Commercial Channels and SMB at Lenovo told CRN  that there were shedloads of companies needing local servers to support the SMB customer. This work is not going to head into the cloud and he saw a significant growth opportunity in the tower and rack business.

Lenovo is paying $2.3 billion for IBM’s x86 server unit, which includes System x, BladeCenter, Flex System blade servers and switches, NeXtScale, iDataPlex and associated software, blade networking and maintenance operations. It is also paying $2.9bn for Google’s Motorola Mobility handset unit, expanding its global smartphone capacity.

The Chinese company is probably going to be luckier at getting its hardware sold than Big Blue anyway. While the rest of the world was moaning about declining PC sales, Lenovo was increasing its PC market share to 18.5 percent against second-placed HP, which has 18.6 percent and saw its sales grow.

In its earnings report released last week, Lenovo posted its first $10 billion quarter and 19th consecutive quarter of growth, driven mostly by global PC sales and smartphone sales in Asia. Lenovo sold five devices per second in the last three months of 2013.

Over the next year Lenovo is expected to place greater emphasis on its own server line as well as the acquired IBM products, its storage devices developed with EMC/Iomega, and Windows 7- and 8-based desktops and mobile computers.