Lenovo Buying IBM x86 Server Business?: 5 Partner Implications

IBM’s (NYSE:IBM) x86 server business could be up for sale. The likely buyer: Lenovo. If the deal happens, there are major implications for channel partners across the server, storage, networking, cloud and managed services markets. Here are five key takeaways for channel partners.

First, the background: IBM announced weak quarterly results yesterday, and CRN reported that Big Blue is negotiating the potential sale of its x86 server business to Lenovo. The potential implications to keep in mind…

1. Lenovo and IBM server VARs: They could be big winners here since Lenovo is a pure channel-focused company with no IT services ambitions. Also, Lenovo earned high grades a decade ago for effectively managing the buyout of IBM’s PC business. Lenovo already has a small but fast-growing server business. Plus, Lenovo has a server-storage relationship with EMC. Acquiring IBM’s x86 server line would give Lenovo (and its channel partners) instant credibility in the server market.

2. Converged Infrastructure: The worlds of storage, networking and compute are converging. IBM has been pitching PureFlex System, PureApplication System and PureData system into the converged data center market. Selling off the x86 server business could raise new questions about the PureSystem strategy. Meanwhile, Cisco, Dell, HP and Oracle each have their own converged strategies — and the foursome would likely attack an IBM x86 server exit…

3. Managed Services Providers: IBM has been promoting x86 servers and the PureSystem strategy aggressivley to managed services providers. The idea is for MSPs and cloud services providers (CSPs) to build next-generation data centers using IBM’s infrastructure. IBM would need to adjust that strategy if it exits the x86 server business. Lenovo, meanwhile, has promoted its PCs and servers as well-managed endpoints for MSPs… 

4. IBM Software Business: IBM’s software business is massive and highly respected. But sales growth has been slowing and The VAR Guy wonders: Would IBM’s software business suffer a bit if bundles with IBM x86 servers were not part of the story? Could Lenovo pick up the slack?

5. IBM SmartCloud Business: IBM has a growing cloud business that competes with Amazon, Rackspace, Windows Azure and more. Would IBM use Lenovo x86 servers to build that infrastructure over the long haul, or would IBM switch to more of a Google approach? Google, after all, custom builds its own x86 servers for its public cloud.

6. Bonus – More Bidders?: Why did IBM or Lenovo leak details about the potential x86 server business sale? Is IBM trying to attract more bidders — perhaps Dell or HP — to the table? Given the current business struggles at both Dell and HP, The VAR Guy doubts those companies would engage in a bidding war for IBM’s x86 server business. But stranger things have happened in the IT market.

That’s all for now. But The VAR Guy will continue to watch this story closely…