​Lenovo eyes top position in server market

Leveraging its recent acquisition of IBM's system X business, Lenovo plans to upsell to existing customers and target large premium enterprises to move from third to first position in the global server market over the next five years.
Written by Aimee Chanthadavong on

Lenovo has announced that it plans to take the number one global position in the server market over the next five years.

Currently, based on IDC findings, Lenovo is currently the third largest player in the server market.

Kong Meng Koh, vice president of Lenovo APAC enterprise business group, said with the recent acquisition of IBM's x86 server business, the company is now well-positioned to target what it believes is a $100 billion market.

This comes at a time where competitors such as IBM are moving away from the server market, mainly because it has been shrinking. Figures from analyst firm Gartner had previously reported that during Q3 2013 server shipments was down by more than 20 percent year on year.

However, unfazed by market trends, Koh told ZDNet there is still tremendous opportunities in the space.

"The reality is if you look at the global PC market it has been flat or slightly declining year on year for the last two or three years; that is a market that is not growing. However, at the same time, Lenovo has been able to grow volume and share in that market through a variety of mature markets and emerging markets," he said.

"We see, on the contrary, for the server market and the enterprise market that even though the growth rate year on year is about 1 to 2 percent, it is significantly more than the PC growth rate, which is negative. We see, unlike many vendors out there, the server market has been a growth industry.

"There is a wave of IoT and cloud, and we will hit an accelerated adoption curve in those devices, and we think it will generate environments for servers and storage on the backend. We want to position ourselves for that growth when it happens."

He also quashed suggestions that the hardware market is depleting as enterprises choose to move into the cloud. Koh said almost 40 percent of large enterprises, such as Telstra and Optus, still want to own their infrastructure on-premise for regulatory purposes, and believes Lenovo's drive in targeting the high-end, large customers will be the way to go as part of its enterprise strategy.

"There is the market for on-premise whether it is leveraging cloud technology, or whether it's traditional datacentre workloads and traditional applications. It is one area of the market that we cannot ignore," Koh said.

But Lenovo is not completely dismissing the growing cloud market either. In fact, Lenovo also has plans to grow its position there, too.

"Cloud is something we also want to be focused on, and we're going to do it in a couple of ways whether it is off-premise, or MSP (managed services provider) type of arrangement," he said.

"These guys are going to need hardware, and we want to be able to provide the right kind of hardware in terms of storage and servers to meet those needs. We believe we're very well positioned to do that right now."

Lenovo's focus on the server market falls under the company's broader strategy to be an end-to-end solutions provider, something in which Koh alluded to as a strategy key competitors, such as HP, have since abandoned.

"One of our competitors said a couple of years ago their business was better together, they now decided they are longer better together, but they're going to be better apart. We're not sure what their strategy is, but our strategy from day one has been very clear, and that is we want to make sure we have every aspect of IT requirements covered from an opportunity perspective," he said.

"If you talk about IoT and mobile, we don't want to be able to just cover the device side, but we want to cover the explosion of demand that is going to be happen on the server processing end, as well as the storage business," he said.

Behind Japan, Australia is the second largest enterprise market for Lenovo, with a majority in the education and healthcare sector, as well as financial institutions and telcos. Koh believes that in order to expand its end-to-end solution strategy, the company will need to leverage and upsell to existing customers.

"Right now if you look across the spectrum of businesses in APAC, the overlap in customers and business partners between the traditional PC, mobile side of the business, and the enterprise is very small; we're looking at 30 to 40 percent overlap within APAC.

"This tells me we've got tremendous opportunity to grow our server business, in our PC customers and channel partners; and the reverse is also true, we have tremendous opportunity to grow our PC and mobile devices among our traditional enterprise type customers."

Disclosure: Aimee Chanthadavong travelled as a guest of Lenovo.


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