Lenovo gears up for long march to be a serious enterprise challenger

With Lenovo completing the acquisition of IBM's x86 server business, nearing the end of a company restructure, and getting its own internal team right, the company is looking forward to focusing on its enterprise customers.
Written by Aimee Chanthadavong, Contributor

Nearly two years ago Lenovo made the decision to buy IBM's x86 server business for $2.3 billion, a deal which was finalised last October.

Under the deal, Lenovo acquired System x, BladeCenter and Flex System blade servers and switches, x86-based Flex integrated systems, NeXtScale and iDataPlex servers and associated software, blade networking, and maintenance operations. This makes the company the third-largest player in the $42.1 billion global x86 server market, and the third-largest player in the Australia and New Zealand market.

Rob Makin, Lenovo enterprise business lead, told ZDNet since the acquisition, the company has been working on moving across IBM's x86 server team to Lenovo, and getting its own internal structure right.

"Part of our core value proposition is to have a complete product portfolio from mobile device to datacentres, so with that you have to an organisation that's aligned with a sense of purpose. We've spent a fair amount of time making sure that happens," he said.

In taking the leap to acquire IBM's x86 server business, Lenovo also set some bold benchmarks: Global plans to achieve AU$5 billion in revenue for this division, grow profitability higher than its PC business within the first year, and to take the number one global position in the server market over the next five years.

Makin said from an Australia and New Zealand point of view, market share has grown locally, as well as regionally.

"We're number three globally and growing. But we've got a long way to go and a lot to focus on. We've got the right strategy, the right customer centric approach, and I'm sure we'll get there. Certainly from an ANZ point of view, the growth we've experienced I'm really pleased with."

Driving the growth in the ANZ market has been the uptake of SAP HANA, Makin said, particularly in the last six months where the "pipeline has been particularly strong" in that side of the business as companies want more access to real-time data.

The company has also been "doubling down" on the rise of companies demanding for technologies to help redesign their datacentre so that it operates simpler and faster, and so the IT components are not working in silos. To deliver on this demand, Lenovo signed partnerships with Nutanix, Datacore, and Simplivity. Makin added that come January, in partnership with Nutanix, the company will launch a Lenovo branded appliance.

However, Makin admitted despite the success so far, the last year hasn't been easy.

"Bringing two companies with different cultures is a challenge," he said.

"It's really a people transformation process; we've had to train and enable our Lenovo people how to sell enterprise. We've also had to make sure the people that were acquired from IBM and System X became more customer-centric, and focused on what is a fast moving pace of Lenovo's culture -- and that's been a challenge, but a good challenge."

Looking forward, Makin said with the company recently completing its restructuring plans following pre-tax income records during first-quarter results dropping 80 percent, Lenovo is now well-positioned to focus on its branding. Lenovo rebranded in June with a digital and social-first strategy, and a new attitude represented by an adaptable logo and ethos: "Never stand still", replacing "For those who do".

"Lenovo is now positioned as an agile brand," Makin said. "For me, that's beneficial because as we start to focus on our branding around the enterprise a lot more, we can do things a lot quicker...to connect with our partners whether digitally or through traditional manners as well,"

This reinforced what the company announced in November when it said it was now in a position to invest in new enterprise areas "while aggressively attacking competition".

Makin added Lenovo will be making further investments in channel partners, legacy partners, and customer go-to market channels including e-commerce touch points and its enterprise sales force.

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