Lenovo/StorMagic Take Aim At Dell, HP, Cisco In Drive To Be 'Lowest Cost Provider' In Hyper-Converged

Lenovo is aiming at the low end of the market with a new portfolio of turnkey hyper-converged solutions starting at $5,000 intended for remote offices, branch offices, and small and midsize businesses -- and relying on the channel to push market share.

Lenovo is offering the new solutions in partnership with software-defined storage firm StorMagic, as it seeks to cover as much ground as possible in the burgeoning hyper-converged market. Lenovo executives told CRN they wouldn't rule out future partnerships with other hot hyper-converged players like Nutanix or SimpliVity as the business grows.

For now, Lenovo is approaching hyper-converged, which it entered in earnest in July in a partnership with Pivot3, with its characteristic aggressive stance.

[Related: Despite Lenovo Americas Growth, Partners See Weakness In PC, Server Demand]

"We're going to drive down our cost structure to be the lowest cost provider in the marketplace versus Dell, versus HP, versus Cisco," Lenovo Vice President and General Manager, North America Enterprise Business Group Brian Hamel told CRN.

The new StorMagic/Lenovo Hyperconverged Solution puts Lenovo's portfolio of enterprise servers, including the entry-level 1U ThinkServer RS140 and System x3250, as well as the high-performance 2U ThinkServer RD650, together with StorMagic’s SvSAN software-defined storage platform, the companies said in a statement.

The burgeoning hyper-converged market represents an important opportunity for the Chinese PC powerhouse as storage and networking stalwarts like Cisco, Dell, EMC and Hewlett-Packard threaten to gobble up market share and pull away from Lenovo as the market heats up, according to a recent report from TBR Inc. analyst Krista Macomber.

Lenovo needs traction in the hyper-converged infrastructure market in order to offset softness in the global PC market, its bread-and-butter business. The company reported a steep earnings decline for its fiscal first quarter ended June 30.

But selling hyper-converged requires expertise in helping customers transition to a whole new style of IT, and Macomber questions whether Lenovo can develop that expertise before being overshadowed by the competition.

"For Lenovo, rounding out capabilities in areas such as consulting, and elevating its messaging beyond point product capabilities, are needed to avoid being locked out of strategic, high-value customer engagements," Macomber said.

There's also not much differentiation between hyper-converged players at the moment, but TBR principal analyst Christian Perry told CRN that's not a big deal.

Perry estimates the hyper-converged market could grow at a 72 percent compound annual rate over the next five years, and Lenovo, by partnering with firms like StorMagic, is putting itself in a good position to take advantage of that growth.

"If Lenovo isn't going to invest in its own software IP, it makes total sense. Lenovo has an excellent supply chain, strong channel expertise, at least on the PC and devices side that we know they're going to apply to the enterprise side," Perry said.

"Every server OEM, every storage OEM absolutely has to be in this market. This is where a lot of customers are moving, and they're purchasing a solution across the data center, across the environment. It's an absolute requirement for Lenovo if Lenovo wants to be in the enterprise space," he said.

TBR sees hyper-converged as a key foothold "at the heart of evolving IT purchase patterns" for Lenovo and other hardware vendors, and that represents a big opportunity for resellers.

The new systems will be distributed through Arrow Electronics, and Hamel said they're a perfect fit for resellers.

"The reseller community loves this, particularly in the U.S. where the shift to cloud has happened faster," Hamel said. "They're looking for solutions where they can wrap value around and retain margin. They're hungry for this type of solution."

StorMagic CEO Hans O'Sullivan said his company's commitment to the channel also will help ensure partners are able to book decent margins on the new systems. "This is another step in enabling the channel with the capabilities they need to generate better margins for themselves," O'Sullivan told CRN. "It's easy to layer on services to increase margin, especially with the reputation we have, and Lenovo has, for good support."

Perry said Lenovo appears to be making the right moves, at least in the early going.

"Lenovo really appears to be going the Dell route," Perry told CRN. "Dell has partnerships with Nutanix, SimpliVity, for example, VMware. It makes sense to go the partner route. Lenovo went big with Pivot3 -- they're going for SMBs with StorMagic. They're covering all their bases."

PUBLISHED AUG. 17, 2015