News

Lenovo Makes Major Datacenter Play with Portfolio Revamp

• By Jeffrey Schwartz
• June 22, 2017

Lenovo this week launched its most expansive portfolio of new datacenter products, over two years after acquiring IBM's x86 server business at the peak of the market.

The company announced the reboot of its entire datacenter portfolio at the Lenovo Transform event in New York City on Tuesday, introducing 26 new servers, storage and network gear, as well as a new line of engineered appliances and hyper-converged systems.

Lenovo executives also shared the company's goal of extending its footprint in datacenters and becoming the leading supplier of high-performance and supercomputing systems, surpassing Cisco, Dell EMC and HPE -- a bold declaration, considering Lenovo's rivals currently have much broader and more modern datacenter portfolios and, consequently, greater market share.

Nevertheless, Lenovo officials at Tuesday's event noted that the company will deliver its 20 millionth server next month. Best known for acquiring IBM's struggling PC business 12 years ago and subsequently achieving market leadership, Lenovo is relatively new to the datacenter field; just two years ago, in another agreement with IBM, Lenovo acquired Big Blue's commodity x86 server business, with the deal being completed a year later.

While Lenovo has rolled out various upgrades since then, the Lenovo Transform event signaled a kickoff of a strategy that brings together new products and revamped development, manufacturing, distribution, marketing and service capabilities. "We are going to disrupt the status quo and accelerate the pace of innovation, not just in our legacy server solution but also in software-defined," said Kirk Skaugen, president of Lenovo's Data Center Group.

Skaugen, a former senior executive at Intel who was tapped late last year to lead Lenovo's datacenter business, believes Lenovo has some distinct advantages over Cisco, Dell EMC and HPE -- notably, that it doesn't have those companies' legacy businesses. "We don't have a huge router business or a huge SAN business to protect," he said. "It's that lack of legacy that's enabling us to invest and get ahead of the curve on this next transition to software-defined. You are going to see us doing that through building our internal IP, through some significant joint ventures, also through some mergers and acquisitions through the next several quarters."

Another key advantage that Skaugen cites is that Lenovo manufactures its own systems.

As bold as the statements Lenovo made this week might sound, the company does have the resources to disrupt the status quo if it can execute. "I've never seen a big, bold statement from Lenovo on the datacenter side," said Patrick Moorhead, principal analyst at Moor Insights and Strategy, during a brief interview after the Lenovo Transform keynote. Moorhead, who said he needs to drill deeper into the roadmap, said Lenovo has been building toward this focus for over a year. "They've thrown down the gauntlet and are definitely at the table," he said.

Moving away from IBM's System x brand, Lenovo launched two new brands this week: ThinkSystem and ThinkAgile. ThinkSystem is a broad portfolio of new platforms consisting of servers, storage and network switches that will roll out this summer with the release of Intel's new Xeon Scalable Processor Family, code-named Skylake.

The new rack-based ThinkSystem offerings include the SR950 4U system, targeted at mission-critical workloads such as transactional systems, ERP and in-memory databases; the more dense SN850 blade server compute node designed for Lenovo's Flex System chassis; and the SD530, Lenovo's high-performance computing entry into the 2U4N form factor designed for its new D2 chassis. Also added to the ThinkSystem line is the new DS Series midrange storage offering available in an all-flash and hybrid SAN configuration, as well as a revamp of Lenovo's network switch offering, including a new SDN controller.

ThinkAgile is what Lenovo describes as its software-defined infrastructure consisting of engineered systems targeting modern hybrid cloud workloads that include hyper-converged systems based on platforms from Microsoft, Nutanix and VMware. Lenovo's planned Azure Stack appliance will fall under the ThinkAgile portfolio and will be called the ThinkAgile SX for Microsoft Azure Stack.

Both the ThinkSystem and ThinkAgile portfolios are based on Lenovo's new systems management platform, XClarity Controller, which the company said offers a modern and intuitive interface that can provide centralized configuration, policy and systems management across both.

While Lenovo plans to accelerate the release of new products and partnerships, Skaugen said the company has made some key operational changes over the past year that will give its datacenter group better focus. For example, Skaugen said the company has moved to a dedicated sales and marketing organization. "In the past, we had people that were shared between PC and datacenter," he said. "Now thousands of salespeople around the world are 100 percent dedicated end-to-end to our datacenter clients.'

Skaugen added that Lenovo now has a dedicated supply chain and procurement organization and has brought in new leadership that can focus on various technology and industry segments. Lenovo has also revamped its channel organization. A year ago, Lenovo's datacenter group had five different channel programs around the world. "We now have one simplified channel program, for dealer registration," he said. "I think our channel is very, very energized to go out to market with Lenovo technology across the board. And we have a whole new set of system integrator relationships [and] a whole new set of partnerships to build solutions together with our system integrator partners."

Moorhead said the moves were long overdue. "While I think Lenovo should have done this two or three years ago, right after they chewed up IBM's xSeries business, these moves should help them become more successful," he said.

As Pund-IT principal analyst Charles King observed in a research note, Lenovo picked up the IBM xSeries business at the peak of the market. Citing IDC figures, King said that when the acquisition closed in January 2015, global server sales grew just 2.3 percent but the x86 systems market grew at twice that rate. Two years later the global server market declined 4.6 percent to $14.6 billion in the fourth quarter of 2016.

"While Lenovo was working to integrate IBM's System x x86 systems and personnel with its own strategies, products and company culture, it was also navigating a notable decline in hardware sales and revenues," King said.

Now that Lenovo has rebooted, King said that given the company's success in the PC business, it would be wrong to underestimate its ability to extend its footprint in the datacenter over time. "It would be a mistake to assume Lenovo isn't fully ready and able to take its efforts in datacenter solutions and sales to the next level."