Whitman: HP Sales Pipeline From IBM-Lenovo Server Deal On The Rise

Hewlett-Packard CEO Meg Whitman said the company’s enterprise server group is benefiting from IBM’s yet-to-be finalized sale of its x86 server business to Lenovo, and the sales pipeline is on the rise.

"We have got more than 600 reported wins over IBM in four months," said Whitman in an interview with CRN. "We are seeing more interest every single day. The pipeline is building dramatically.’

HP has moved aggressively to capture IBM x86 server share since IBM announced in January that it was selling its x86 server business to Lenovo in a $2.3 billion deal.
HP, for example, will host more than 70 priority IBM "win over" accounts at its Discover conference, June 10-12 in Las Vegas, according to HP Vice President of Strategic Growth and Business Development Chuck Smith.

[Related: CRN Exclusive Q&A: Whitman On Sales Gains Vs. IBM-Lenovo, Cisco And A Fractured VCE ]

HP also is actively working with 100 IBM-focused partners to grow their business with HP, said Smith. What’s more, HP is working with distributors on the IBM opportunity.

One sign that the HP effort to target IBM x86 server business is working: data from market researcher IDC for the first quarter showing HP performing better than IBM in an x86 worldwide server market. IDC said that HP's x86 ProLiant revenue was relatively flat in the first quarter with a 0.4 percent year-over-year increase, while IBM's System x sales in the quarter declined 17.6 percent.

One top executive for a one-time IBM exclusive partner, who did not want to be identified, said the IBM Lenovo deal has created a "lot of consternation" among IBM customers.

"Eighty percent of the customers were very alarmed and 20 percent shrugged," he said. ’Enterprise customers already had concerns about the direction IBM was going in with the x86 business. HP is doing a good job taking IBM customers. HP has a really good story with an integrated stack, good management software, big R&D investments and the ability to service it all with one throat to choke. These are customers that can’t afford to fool around with multiple calls for support."

IBM commercial and federal customers are looking closely at buying HP servers in the wake of the yet-to-be-finalized IBM x86 server sale to Lenovo, said Kelly Ireland, CEO of CB Technologies, a Westminster, Calif.-based Platinum HP Enterprise partner. "We are actively in discussions with many, many IBM customers that we couldn't get a conversation with before the Lenovo deal," she said.

NEXT: HP Targets IBM Lenovo x86 Opportunity

HP has put a number of sales templates and tools on its partner portal aimed at targeting the x86 IBM opportunity, including customer letters, sales presentations and HP financial services support, said HP PartnerOne Director of Marketing Strategy Patrick Eitenbichler.

HP also is focused on increasing its share of the business from IBM partners sure to face issues in the wake of moving to the Lenovo partner program for x86 servers, said Eitenbichler. Key to attracting those partners is an HP enterprise product portfolio with rich margin and partner opportunities in areas like cloud with Helion, big data with Haven, and security with ArcSight and TippingPoint.

A vendor benchmark study focused on 10 specific metrics, including margin retention/profitability and ease of doing business from channel research company Canalys, based on partner feedback, showed HP’s Enterprise Group scoring 6.6 on a 10-point scale compared to a score of 6.1 for Lenovo. "Lenovo’s program needs to undergo a transformation as it adopts the IBM x86 portfolio and starts having more enterprise-level engagements which are more project-oriented than transactional,’ said Alex Smith, a senior analyst for Canalys, based in Palo Alto, Calif.

Lenovo is sure to face tough questions from enterprise customers on how they are going to provide enterprise-level support and integration, said Eitenbichler.

Adalio Sanchez, general manager of IBM's System x business, who is expected to transfer to Lenovo with the completion of the sale, has pointed to a "renewed and very aggressive" push to drive the System x business forward. "We launched a 'Winning in Transition' website and have connected with 1,300 partners," he recently told CRN. "We have put in place a revenue growth fund program and a loyalty program."

What's more, he claims, HP has taken a beating in the PC business since Lenovo acquired the IBM PC business.

"Lenovo continued to innovate and the rest is history," he said. "Lenovo is the worldwide leader in PC sales." Lenovo, in fact, was the No. 1 PC maker in worldwide shipments in the first quarter of 2014 with HP No. 2, according to market researcher IDC.

A top executive for a large IBM partner, who did not want to be identified, however, said he sees HP as a better long-term bet than IBM or Lenovo. "I can be more successful and make more money with HP," he said. "I expect my business with HP to double this year."

PUBLISHED JUNE 2, 2014