Lenovo: 'Attack The Rack' Then Dell And HP

With Lenovo's $2.3 billion acquisition of IBM's x86 server business awaiting regulatory approval, Lenovo partners have already begun openly talking logistics about moving more business to the data center and, in some cases, moving accounts from rivals Dell and Hewlett-Packard to Lenovo. Meanwhile, Lenovo executives have been forced to stay silent until the purchase is finalized. But at this year's annual Lenovo Accelerate 2014 conference in Orlando, Fla., attendees got a sneak peek at the Chinese PC powerhouse's server playbook from executives.

Darrel Ward, vice president, Enterprise Product Marketing at Lenovo, came the closest to outlining Lenovo's enterprise ambitions, which include pushing harder into the data center with servers and storage products. He rallied the Lenovo partner troops with a new Lenovo mantra: "Attack the rack." It's a strategy, Ward said, that will help Lenovo crack new software-defined data centers and software-defined storage markets.

"When you looked at Lenovo's offerings, they really didn't meet all the needs of large enterprise," Ward said. That's changing, he said, with the introduction of enterprise-grade, two-socket towers, EMC storage solutions and products such as its ThinkServer SA120, which is a modular and scalable rack-mount, direct-attached storage (DAS) enclosure.

[Related: Lenovo Slims Down The Desktop With New P300 ThinkStation ]

"We are going to attack the rack in the second half of the year with an all-new performance category of ThinkServer products," Ward said. "These products will be the most innovative, the most creative, the most capable and the most versatile platforms you've ever seen from ThinkServer. These are going to be products with capabilities that HP and Dell will not have. We have optimized these platforms with the latest-and-greatest performance technologies. We have created an innovative way to modularize the storage in the IO of these platforms for maximum flexibility and infinite upsell. We call it 'any bay and any fabric.'" In a phrase heard often at this week's conference Ward added, "More on that later this year.'"

Ward was careful to avoid sharing concrete plans for its soon-to-be-acquired IBM x86 portfolio. Discussions were limited only to Lenovo's ThinkServer brand, which he said would be an integral part of its server strategy moving forward. Lenovo is in the process of buying IBM's System x, BladeCenter, and Flex System blade servers and switches, x86-based Flex integrated systems, IBM Lenovo ServersNeXtScale and iDataPlex server portfolios. Lenovo said the deal is expected to close in the Fall 2014 time frame.

Lenovo partners at the Accelerate event, which were mostly small to midsize businesses, said they are eager to step up their server business with a new mix of ThinkServers and IBM's x86 line of servers and networking technology. Chris Dadaian, senior account executive at Business IT Source, a Whitefish Bay, Wis., Lenovo and HP partner that does roughly $35 million in annual sales, said he is already selling Lenovo into large corporate accounts.

"A year-and-half ago, if you told a customer that Lenovo had a server they would do a double-take," Dadaian said. "But Lenovo's price points help, and then there is the IBM cachet with its client devices and its upcoming IBM x86 server acquisition." Dadaian, who said his primary server vendor is HP, said Lenovo sales reps have been "relentless" when it comes to pushing servers into larger accounts over the past six months. "We have heard nothing else from our [Lenovo] reps other than servers, servers and servers."

Dadaian said he's impressed with how far Lenovo has come in such a short time, filling out its enterprise portfolio with an ecosystem of server products that allow him to sell deeper into the enterprise with ThinkStation towers, ThinkServers and storage hardware. "Right now, Lenovo doesn't do blades, but they will. We never thought Lenovo would offer high-density servers, but they do now."

NEXT: Positioning Against Dell And Hewlett-Packard

When it comes to positioning Lenovo products against Dell and Hewlett-Packard, Lenovo is taking a calculated approach.

"We have spent a great deal of time over the past year expanding the environments that Lenovo platforms work in," Ward said. "From a systems perspective, we are interested in integrating in existing environments and not trying to get partners to displace the existing system's management paradigms and consoles. We are not trying to displace the incumbents. The position for Lenovo is, you trust Lenovo and the ThinkServer brand. It's just as capable and probably a better value than the competition."

However, toward the second half of the year, Ward said Lenovo will look to cash in on laying the Lenovo groundwork in SMB and large enterprise. "In the second half of the year, as we refresh the products, I think there will be some really big differentiation where you'll have the horsepower, the technology and capabilities to actually start displacing the incumbents," he said.

"We think the competition is taking its eye off the ball when it comes to innovative hardware platforms," Ward said. "We are in the hardware platform business. That's what we want, that's where we focus, and we are in the channel business. Some of our competitors are distracted and some of them are focusing on other parts of their business."

Ward said Intel's Brickland refresh will trigger an enterprise-class server blitz from Lenovo.

"Lenovo has been moving up the data center food chain with some impressive products," said Rick Khan, technology solutions consultant, Microtrends, an SMB Lenovo partner based in Pasadena, Calif. "Its technology is solid and, quite frankly, Lenovo has been earning my business." He said as Lenovo's acquisition of IBM's x86 business nears it has stepped up its partner game, making him question his Dell alliance.

Kahn said with Lenovo he can count on a 16 percent to 18 percent margin. "With Dell, I've got 8 percent margin. With Dell, the customer can configure his own server on Dell.com, buy via DRM or go direct to Dell.com. That forces me to come down on my Dell price. After I shave another point off for shipping, it's not worth my while selling Dell. With Lenovo, customers don't shop prices and, when they do, Lenovo direct is more expensive than my quote."

Lenovo partners say if Lenovo mirrors the success it had five years ago when it bought IBM's PC business with this server business, Dell and HP should have reason to worry.
"I will be bringing my Dell business to Lenovo as soon as Lenovo has apples-to-apples offerings to Dell," Khan said. "Lenovo still doesn't have the types of high-end configurations I need, such as 6-GB Fiberlink Ports. But it will, the only question is when."

One Lenovo PC reseller, which sells primarily HP servers, who asked not to be identified, said Lenovo is now a regular part of server sales calls. "Servers have not been a core competency of Lenovo. But it's an area where Lenovo now has clout thanks to the Think brand. Lenovo's new server racks and software management vision of a data center show that Lenovo sees a lot of life and innovation in a category that other companies have declared is dead. I didn't know who Lenovo was three years ago, but today they are a contender."

Business IT Source's Dadaian said for his company, it's not about displacing his existing HP server business; it's about new opportunities where Lenovo has a chance in giving Dell and HP a run for their money.

"We started selling [Lenovo] to SMB, but we are moving into large enterprise accounts. We aren't flipping them. This is net new data center business. Now we can go in there and talk about more than PCs. We can talk Lenovo projects with storage and a growing product portfolio from ThinkStation, ThinkServer, to EMC storage."

PUBLISHED MAY 14, 2014