Tough times strike Lenovo’s data center business

Lenovo has done a bang-up job in taking over IBM’s old PC business and turning it into a rousing success. Or at least as much of a success as can be had in an era of declining PC sales. Its luck with the server business? Not so much.

Lenovo picked up IBM’s x86 server business in 2014 after some grumbling and consternation from the government. It seemed the government and military had quite an installed base of IBM servers and wasn’t keen on the Chinese taking ownership of them. But the deal went through after some assurances. Looks like that was the least of their problems. 

According to Gartner, in the first quarter of 2017, Lenovo sales fell 16 percent and its market share dropped to just 5.8 percent. Lenovo was fifth, behind HPE, Dell EMC, IBM (which is only selling Power-based RISC systems and mainframes) and Cisco. In fact, Lenovo had been ahead of Cisco in terms of units sold. When you fall behind Cisco in servers, a business Cisco didn’t even enter until a decade ago, you have a problem. 

Now partners are expressing concern over the departure of the company’s North American president, Emilio Ghilardi, after just 18 months on the job. Ron Venzin, partner at Focal Point Solutions Group, summed it up with this comment to CRN: “When customers look at Lenovo, they see desktops and laptops. They don’t look at Lenovo in the data center.” 

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