Partners: IBM x86 Sale Approval Could Set Off Security Questions For Lenovo

Solution provider partners said Friday that regulatory approval of the $2.3 billion sale of IBM’s x86 business to Lenovo is just the start of looming security questions that Lenovo will face as it attempts to gain a foothold in the data center.

’When you look at markets like aerospace and defense where IBM has traditionally had a strong foothold, it is going to be a big challenge for Lenovo,’ said Bob Venero, the CEO of Future Tech, a Holbrook, N.Y.-based solution provider and No. 211 on the SP500. ’I think you are going to see an exodus out of the gate in those markets because of the fear of potential data leakage and data security risk.’

The more sensitive the data, the bigger the challenge for Lenovo, Venero told CRN.

[Related: IBM Counters FUD Over x86 Sale: Talks China Fears And Lost Market Share]

IBM said late Friday it had received approval for the sale of its x86 server business to Chinese computer giant Lenovo from the Committee on Foreign Investment in the United States (CFIUS).

’The clearance by CFIUS of this transaction is good news for both IBM and Lenovo, and for our customers and employees,’ IBM said in a statement. ’The parties now look forward to closing the transaction.’

The real battle will now be fought in the sales trenches with solution providers teaming with Lenovo to convince customers that data security is not an issue, solution providers told CRN.

’In the data center where customers have a lot of confidential internal data, there is a lot of questions that have to be answered by Lenovo,’ Venero said. ’They have to get customers comfortable with the potential of having a data center that is with a predominately Chinese-owned company. They have to deal with that.’

Chris Pyle, president and CEO of Boca Raton, Fla.-based solution provider Champion Solutions Group, agreed that security questions will be an issue for Lenovo and its partners.

"Sure it will raise more questions with some of our customers," Pyle said. "From a partner perspective that's not such a bad thing. Whenever we get a chance to talk to our customers, that's a good thing. At the end of the day, we'll just listen to our customers."

Pyle said regulatory approval of the deal is a plus for IBM, Lenovo and the partners of both companies.

NEXT:Lenovo Faces IBM x86 Server Sale Integration Challenges

"We have been stuck in purgatory and now finally IBM and Lenovo are moving the ball forward,’ he said. ’We have been trying to figure out what's what. Now, at least, we are a step closer to hearing about what the Lenovo incentives will be and how are we going to make money."

Douglas Grosfield, president and CEO of Xylotek Solutions, a Lenovo and IBM partner, said now that the deal has been approved the "proof is in the pudding" in terms of how smooth of a transition IBM's x86 business will be to Lenovo.

"As IBM partners we have gone through this with Lenovo once already with the PC business,’ Grosfield said. ’That wasn't so smooth and we have been, as a partner, quite involved with discussions with both companies around how to better the transition with their x86 business."

Grosfield said the transition of IBM's PC business to Lenovo created a few bumps in the road for partners in terms of part numbers and product ordering. With its x86 business, however, Grosfield said he has "high hopes" for a smoother transition, given how vocal partners have been on the issue.

"Since the discussions started to transfer this business, as well, there have been a couple of partner conferences both with Lenovo and IBM," Grosfield said. "Select partners of both organizations were involved in discussions around what went wrong during the PC business transition and how we can streamline that process."

Complicating the matter, is Lenovo's attempt to integrate not one, but two major acquisitions. Just six days after the blockbuster IBM deal, Lenovo announced the $2.9 billion purchase of Google’s Motorola Mobility smartphone business.

Lenovo said in a prepared statement it has ’stated consistently for both the x86 and Motorola Mobility acquisitions, we continue to work through a number of regulatory and business processes to ensure an effective and timely closure on both deals. We remain on track to close both deals by the end of the year."

Venero, for his part, said he already partners closely with Hewlett Packard, EMC and Dell in the data center market.

’From our perspective, IBM has been losing ground in the data center,’ he said. ’Lenovo is going to have to show us continued investment in ingenuity, design and planning to avoid perceived risk associated with Lenovo servers in the data center. It’s not a slam dunk. They are going to have to work hard to earn the trust and confidence of customers and partners.’

Kristin Bent and Steven Burke contributed to this article.

PUBLISHED AUG. 15, 2014