Lenovo making moves on enterprise server market

PUBLISHED : Thursday, 29 August, 2013, 12:00am
UPDATED : Thursday, 29 August, 2013, 5:07am

While its growing smartphone and media tablet business hog the spotlight, Lenovo has quietly started a major push into the lucrative enterprise server market.

Lenovo, the world's largest supplier of personal computers, confirmed that production has commenced on x86-standard servers, which are embedded in storage equipment from strategic partner EMC.

We expect enterprise products, such as server and storage, to be the next driver after smartphones and tablets
Alberto Moel, Bernstein Research senior analyst

"That has already started and it is on track. We're optimistic about the outcome of this partnership," Lenovo chief financial officer Wong Wai-ming told the South China Morning Post. He did not say whether that operation began in the quarter to June or in the current quarter.

The wide-ranging collaboration with EMC, the world's top enterprise storage systems maker, was announced in August last year. It involved creating an x86 server development programme with EMC's help, and forming a joint venture to make and sell EMC's network-attached storage products for sale to small- and medium-sized businesses. That co-operation enables EMC to penetrate deeper into the world's second-biggest economy, while providing Lenovo with a high-margin business to boost sales in the corporate market.

Lenovo chairman and chief executive Yang Yuanqing said recently that the company wanted to "expand this business more aggressively" outside the mainland, especially in North America and Europe.

"This is part of our PC-Plus strategy," Yang said, describing expansion beyond its core personal computer business. He declined to discuss reported plans to buy the large x86 server division of IBM.

In a research note, Bernstein Research senior analyst Alberto Moel said: "We expect enterprise products, such as server and storage, to be the next driver after smartphones and tablets." Moel forecast Lenovo's revenue for its fiscal year to March to total US$37.2 billion, boosted by smartphone and server sales.

Strong smartphone and tablet demand had helped Lenovo's revenue in the quarter to June reach US$8.7 billion.