Lenovo to review server business unit

Lenovo is reviewing its server business after admitting that the current volumes generated by the unit have not been high enough.

Lenovo is reviewing its server business after admitting that the current volumes generated by the unit have not been high enough.

Data by analyst IDC shows that 64,000 SME targeted ThinkServers were sold by Lenovo worldwide from the fourth quarter 2008 launch to the third quarter last year, placing it in eighth spot in terms of market share.

"At this particular point in time we are in a bit of a hole regarding servers," admitted Milko Van Duijl, president of Western Europe, North America, Japan, Australia and New Zealand.

The limited portfolio of one and two-way servers aimed at SME customers had confined its market penetration to "a smaller space" he told MicroScope.

"We are evaluating what we are going to do with it, clearly if we don't sell hundreds of thousands of units it doesn't add much to the business so there is a lot of work [ahead]," he added.

In the second half of 2010 a corporate desktop refresh cycle is expected to come online and some customers may look to upgrade ageing servers at the same time.

Van Duijl said "server is an attractive product segment, its complimentary to PCs" and though he conceded it was possible that it may exit the business it was not on the agenda and was highly unlikely to happen, he added.

"There are plenty of things we can do before we get to that stage," he said.

This leaves Lenovo with options to get more aggressively priced in the market, expand its deal with IBM, or acquire a business.

Breaking into a market space is never easy for a new entrant said Nathaniel Martinez, European director of server research at IDC. "Lenovo has needed to improve its relationship with the channel to increase the volumes."

Work to get better traction among resellers has already started said Rob Tomlin, business unit director at distributor Interface Solutions.

"We are working closely with Lenovo to put a plan in place to grow the server business in the partner base. The x86 UK server market is highly contested and to take incremental share you need a good strategy or deep pockets," he said.



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