Lenovo’s $2.3 billion dollar acquisition of IBM’s x86 server hardware business and related maintenance services is undoubtedly good news for Lenovo as it expands even further beyond the PC market since the 2005 purchase of IBM’s ThinkPad. Being unable to establish relevant relationships with software manufacturers in the past, such as Microsoft, Oracle or VMware, Lenovo can finally strengthen its foothold and credibility in the server business.
So, who else is this good news for? As much as IBM is technically losing market share, the company recognized its lack of success in the past few years when it came to competing with Dell and Hewlett-Packard in the server market. Allowing Lenovo to capitalize on their computer manufacturing efficiencies and squeeze more profit from server sales than IBM could hope to, IBM benefits from increased exposure from Lenovo in the Chinese market.
Besides, IBM is aiming higher and bigger anyway. Looking to shed the responsibility of the day-to-day plumbing of commoditized businesses- PCs, printers and disk storage- IBM will focus on growth areas of data analytics, software and cloud computing and, particularly, its new Watson business unit.
This acquisition bumps Lenovo from the sixth largest server vendor in the world to the third, effectively cramping the stronghold of HP and Dell in the server market.
The question remains, then, how comfortable are we with Lenovo supporting business enterprises?
Although any large purchase made by an international firm to acquire a U.S enterprise would elicit a series of reviews, what are the concerns that could stand in the way of Lenovo and IBM closing the deal?
– If the acquired servers operate critical U.S infrastructure like telecommunications
– If servers are used by government agencies
– The appearance of increased risk of cyber monitoring or cyber disruption
– In general, increased and heavier security concerns in 2014 than in the past decade, like the 2005 ThinkPad purchase
Although it remains uncertain as to whether upcoming security reviews of the purchase could affect the outcome, this is one incredible opportunity for Lenovo to flex its innovative prowess as an IT giant.
What are your opinions on the Lenovo purchase? Is this an opportunity for Dell and HP to seize IBM customers who are unsure of the Lenovo acquisition? I look forward to your comments below.