Lenovo's IBM ties may pave way for enterprise storage acquisition

Lenovo could be looking at another big deal with International Business Machines, following its acquisition of IBM's low-end server division, analysts said.

Under a US$2.3 billion agreement to buy IBM's x86 server business, Lenovo appears to be paving the way for a future acquisition involving enterprise storage systems. As part of the x86 server deal, Lenovo will manufacture and resell IBM's entry-level and midrange enterprise storage products.

Christian Perry, a senior analyst at Technology Business Research, said the agreement bears watching, "because we believe that the storage business is also a potential target for divestiture by IBM".

"If Lenovo experiences success in reselling pieces of that portfolio, it could consider acquiring that business from IBM in the future," Perry said.

Lenovo will be manufacturing and reselling disk and tape storage systems, as well as several system software products offered by IBM.

The products are part of IBM's systems and technology business segment, which contributed US$14.4 billion to the Armonk, New York-based company's overall revenue of US$99.8 billion last year.

The systems and technology segment makes up the remaining hardware business of IBM, which has been focusing more on high-margin professional services and software. Lenovo purchased IBM's personal computer division for US$1.75 billion in 2005.