Lenovo works with EMC for storage, server sales

PUBLISHED : Thursday, 02 August, 2012, 12:00am
UPDATED : Wednesday, 15 August, 2012, 10:51pm


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Lenovo, the world's second-largest supplier of personal computers, is taking a big step to expand its reach in the global server and storage system markets through a broad partnership with United States-based EMC.

The two companies announced in Beijing yesterday a three-pronged strategy to combine key resources and boost efficiency in delivering their products to companies around the world.

EMC, the world's biggest storage systems maker, and Lenovo will jointly create a server technology development programme to accelerate the Chinese company's capabilities in producing x86 standard servers. These products will also be embedded in selected EMC storage systems.

In addition, Lenovo agreed to become a contract manufacturer of EMC's network-attached storage (NAS) line and a reseller of these products to its customers across mainland China. That reseller arrangement will later be expanded to other markets worldwide.

Yang Yuanqing, the chairman and chief executive of Lenovo, said the partnership would give the company 'strong back-end [production] capabilities and business foundation in servers and storage'.

Market research firm IDC forecast total server sales on the mainland of 1.35 million units this year and sales of disk-storage systems of US$1.65 billion. Worldwide server shipments are predicted to reach 8.53 million units this year, and disk-storage system sales to hit US$26.71 billion.

EMC and Lenovo also plan to bring certain assets and resources from EMC's Iomega business into a new joint venture that will offer NAS systems to small and medium-sized enterprises. This venture is expected to be set up by the end of the year.

'The relationship with Lenovo represents a powerful opportunity for EMC to significantly expand our presence in China,' EMC chairman and chief executive Joe Tucci said.

Avneesh Saxena, the group vice-president at IDC Asia-Pacific, said EMC's storage sales on the mainland 'should definitely look up' because Lenovo had 'a better server market share in its home market'.

In a recent interview, Lenovo chief financial officer Wong Wai-ming said the company had 'a very solid list' of commercial customers.

'Servers and storage systems are ancillary products that can easily be pushed to our existing commercial client base,' Wong said. He said those products represented 'growth drivers' for Lenovo since many firms were building 'cloud computing' infrastructure for online services.

Lenovo seized a 1.7 per cent global market share in servers last year, with total shipments of 159,725 units, to become the world's fourth-biggest supplier of servers, technology research firm Gartner's figures show.

'If the Lenovo-EMC server technology development programme pays off over time, it would make Lenovo's servers more competitive,' Bernstein Research senior analyst Alberto Moel said.