Lenovo, EMC Partner on Servers, Networked Storage

The world’s second largest PC company, Lenovo, and cloud computing and storage giant EMC Corp. (NYSE: EMC) announced a worldwide strategic partnership to expand EMC’s reach in China and other high-growth markets as well as bolster Lenovo’s standing as a provider of servers and networked storage solutions.

The mutually beneficial partnership was created to combine the two companies’ expertise in three areas: First, the companies have formed a server technology development program that the companies hope will accelerate and extend Lenovo’s capabilities in the x86 industry-standard server segment. Lenovo will market the servers and they will be embedded into selected EMC storage systems.

Second, working to expand their market base — EMC‘s in particular — they have forged an original equipment manufacturer (OEM) and reseller relationship under which Lenovo will provide EMC’s networked storage solutions to its customers, initially in China and expanding into other global markets.

And finally, in an effort to address the SMB market, the companieswill collaborate on a network attached storage (NAS) line of products through a new joint venture, drawing upon assets and resources from EMC’s Iomega business.

Lenovo will hold a majority interest in the new joint venture, which is expected to close by the end of 2012. It will contribute cash, while EMC will contribute certain assets and resources of Iomega.

The partnership is a major announcement with many implications for the highly competitive server and storage market, particularly in regards to the China market and the efforts of IBM (NYSE: IBM), Dell (NASDAQ: DELL), Hewlett-Packard (NYSE: HPQ) and others to gain a foothold there.

It’s also a wise move for Lenovo, as storage server products typically boast higher profit margins than PCs. The company currently controls just over 11 percent of China’s server marker, IT research firm Gartner reported earlier this year.