Leaked Lenovo Memo Aims To Quell F.U.D. Over IBM Server Acquisition

A leaked memo to Lenovo's server sales team Tuesday told its staff to dismiss industry trash talk its rivals are spinning over the pending acquisition of IBM's low-end x86 server business. The memo, written by Gerry Smith, executive vice president of the Lenovo Enterprise Business Group, said the real uncertainty and doubt in the server market is being created by companies that are dealing with genuine upheaval themselves.

"Ever since we made the exciting announcement to acquire IBM's x86 server business back in January, some of our competitors have tried to slow Lenovo's momentum by spreading uncertainty and doubt about Lenovo among our customers, suppliers and other third parties. As the old saying goes, those who live in glass houses, shouldn't throw stones," Smith wrote in the memo obtained by CRN.

The leaked Lenovo memo comes weeks after Hewlett-Packard's CEO Meg Whitman publicly stated her company was set to pounce on a bid to grab server share from IBM Lenovo in the wake of the instability caused by IBM's $2.3 billion sale of its x86 server business to Chinese computer giant Lenovo.

Related: 30 Questions For HP CEO Meg Whitman

"Our competitors in the enterprise space are both in the midst of major corporate transitions. As their customers try to avoid the real uncertainty and doubt created by those upheavals, you should feel very confident in presenting Lenovo and the great products and services we offer," Smith wrote.

Smith's memo avoids calling out specific companies, but both Dell and HP are both dealing with huge business transformations of their own. HP is in the midst of a five-year turnaround plan expected to be complete in 2015. Last year, Dell completed a $24.9 billion leveraged buyout to go private in an effort to burn its image as a low-cost hardware supplier and convince the world it is a full-solutions player.

"Most important, we are committed to IBM's product roadmap and will extend support to end-of-life for any current product offerings. We bought this business with the promise of continuity to customers, both ours and IBM's," Smith wrote.

Messaging from Lenovo's top executives to its sales team is echoed to channel partners via emails. Lenovo resellers said that since Lenovo announced a deal to buy IBM's x86 server business, it has amped up promotions for back- and front-end rebates, new customer acquisition bonuses and upped incentives for volume sales.

Douglas Grosfield, CEO of Xylotek Solutions, an Ontario-based solution provider, and Lenovo and IBM partner, said, "Lenovo is stepping up its game. It's understandable. This is an incredibly volatile market, and Lenovo can't afford to lose one single point of server market share. There is a lot on the line for Lenovo and IBM."

Smith told its server sales force that: "We have always said we would not be distracted by our competitors financial maneuvering or strategic flip flops and I do not intend to change this course today. This has served us well as we became the number 1 PC maker in the world, and even now, as we prepare to accelerate our x86 server and handset businesses. The truth is, the competition should be less focused on us, and more focused on themselves and the value they bring to customers. So, to the degree our success distracts them, we should be happy."

George Brown, CEO of Brown Enterprise Solutions, and Dublin, Ohio-based Lenovo partner, said he is unfazed by the industry trash talk. "Fear uncertainty and doubt has always created an opportunity for us to talk to our customers more about what's going on. It can actually be an opportunity to build a stronger relationship with our customers."

"At the end of the day HP, Lenovo, IBM and Dell need to stop putting the other down," Grosfield said. "Ultimately, you need to focus on what you can do and not on what your competition can't do."

NEXT: Full Version Of Lenovo's Memo To Its Server Sales Team

TO: Lenovo’s Global Enterprise/Server Salesforce

FR: Gerry Smith

RE: Competition

Ever since we made the exciting announcement to acquire IBM's x86 server business back in January, some of our competitors have tried to slow Lenovo's momentum by spreading uncertainty and doubt about Lenovo among our customers, suppliers and other third-parties. As the old saying goes, those who live in glass houses, shouldn't throw stones.

We have always said we would not be distracted by our competitors financial maneuvering or strategic flip flops and I do not intend to change this course today. This has served us well as we became the number 1 PC maker in the world, and even now, as we prepare to accelerate our x86 server and handset businesses. The truth is, the competition should be less focused on us, and more focused on themselves and the value they bring to customers. So, to the degree our success distracts them, we should be happy.

With all this said, I do not think this means we should sit still when we are attacked. I want each of you to be very confident in taking Lenovo's current offering to our customers, and even more excited about the new universe of opportunity that lies ahead when the x86 server deal closes.

Remember, our competitors in the enterprise space are both in the midst of major corporate transitions. As their customers try to avoid the real uncertainty and doubt created by those upheavals, you should feel very confident in presenting Lenovo and the great products and services we offer.

To this end, here are the strengths I want you to proactively drive in your interactions with customers:

Lenovo is expert at integrating businesses it acquires.

From IBM PC, to CCE in Brazil and NEC in Japan, we have shown we know how to use M&A to create value for customers and drive our own business. There is every reason to believe Lenovo can be just as successful with the x86 and Motorola investments.

We will preserve IBM's product roadmap, just like we did in the IBM PC acquisition.

Lenovo is purchasing IBM's x86 business intact, offering customers the same products, the same service and support. Most important, we are committed to IBM's product roadmap, and will extend support to end-of-life for any current product offerings. We bought this business with the promise of continuity to customers, both ours and IBM's.

We have a core commitment to long term R&D.

One of the most attractive parts of this acquisition are the R&D skills that the IBM x86 team has to offer, skills that Lenovo currently does not have and frankly needed to acquire in order to give our server customers a reason to bet on us as the solution to their future technology needs. We are thrilled to be bringing such industry-leading R&D resources on board.

We have shown that innovation is in our DNA.

Lenovo prides itself on innovation, it's what makes us go. The Horizon tabletop PC or the Yoga Tablet, are both industry trend setters. The IBM x86 portfolio is top-to-bottom stellar, but the prized asset here is the innovative thinking that stands behind it. With Peter, Roy and Darrel – our technology leaders and industry experts – we are already constantly pushing the envelope on innovation, and this is an opportunity to do even more and build even better products for our customers.

We have a world-class supply chain and a disciplined Business Management System. These consistently deliver efficiency, productivity and results for our customers. As you know, these are already a sweet spot for us at Lenovo and we will bring this focus to the new business.

All of this shows our customers that they can trust us to get it right. So, when you see our competitors throwing stones, don't hesitate to stand up, push back and share our story, strengths and commitments.

The bottom line is that Lenovo has a rock solid commitment to innovation with supply chain excellence in our DNA. We have the best products, a strong, proven strategy, and a globally diverse organization that is second to none. We should not only be excited about this, but we should be making sure our customers feel the same way.

Our success in the Enterprise is essential to Lenovo's PC Plus strategy and our industry leadership. So, let's charge ahead, execute, and WIN! I have great confidence in you all!

Best,

Gerry

PUBLISHED MARCH 18, 2014