Lenovo to start shipping x86 servers by sea

Lenovo to bring in mixed sea- and air-freight model as part of plans to take on Dell and HP in volume server market

Lenovo will start shipping some IBM x86 servers to UK customers by sea as part of its mission to make the acquired brand more competitive.

Talking to CRN a month after Lenovo took control of the business in the UK, Darren Phelps, channel director at Lenovo UK and Ireland, said the vendor will get more aggressive on price as it takes the acquired products out to its 2,500-strong UK reseller base and squares up to HP and Dell.

"For our existing SMB business in PCs, the majority - 80 per cent - of that is coming from sea," he said.

"There is no sea freight route to market at the moment for the IBM server business so we can immediately change that. Once we scale up our business [in distribution], having a mixture of air freight and sea freight will give us a lower cost and therefore we can compete and be a bit more aggressive than we are today."

Phelps added: "Sea freight takes longer but if you are planning now what you are going to be selling in six to eight weeks' time, it makes sense, and it is exactly what we do with the PC business."

Lenovo's acquisition of IBM's x86 business thrust it from sixth to third in the global standings, to about 14 per cent market share, adding high-end muscle to its existing SMB Thinkserver business, Phelps said.

The goal now is to rapidly increase the acquired technology's penetration in Lenovo's 250- to 1,000-seat mid-market stronghold, where IBM has traditionally been weak.

"We are strong in the high-end business with IBM but the volume piece is where we now need to attack," Phelps said.

"We need to be competitive on price, which means we need to run the same channel model [with x86] that we do today in the PC space, which we call TopSeller. We need to build that same transactional model through distribution and resellers."

IBM and Lenovo's various channel programmes will start to come together from the start of Lenovo's financial 2016 beginning 1 April, Phelps said.

"Partners will quickly see during this quarter and coming into next quarter that we are going to re-engineer the programmes," he said. "There were many ways to earn incentives in the old [IBM] world. In the new world, in line with how we run PCs, there will now be a few simple ways for partners to earn money."

Some 20 to 25 per cent of the UK x86 business was conducted directly under IBM, compared with Lenovo's figure of just five to six per cent.

"We are an indirect business and the intention going forward is to replicate where we are in the PC business," Phelps (pictured) said.

He added: "The channel strategy is to keep it simple. It won't be a case of 'what are the server people doing, and what are the PC people doing'? There may be a different stack of incentives in percentage terms but in terms of there being a different incentive programme and being paid at different times, from April we will start to blend that in and make one programme across the whole portfolio, be it PCs, tablets, servers or storage."

Lenovo will also work hard to protect existing x86 UK resellers, Phelps said.

Former IBM partners should have no concerns over whether Lenovo has the experience to run a successful server business that can rival HP or Dell, he added.

"We've bought the entire business - the R&D, the manufacturing, the people, the sales skills. We've got 22-plus people just in the x86 technical business in the UK and Ireland on top of the Thinkserver business I ran, which had four to five people. And we're pretty dominant in the global and enterprise space and at the top end in the City, so we are trusted."

So too has Lenovo learned from the teething problems associated with its 2005 acquisition of IBM's PC business, Phelps said.

"We had all the learnings from that and Lenovo is a different scale now," he said.