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3 reasons why you can’t afford to ignore the IBM/Lenovo x86 server deal

tammie_aron on ‎08-20-2014 11:40 AM

IBM has sold its x86 server business to Lenovo (subject to regulatory approval) and many customers are concerned about the impact of the deal on their businesses.


SuitPic2.jpgIn the first of two blogs, Allen Greene, HP Project Smart Choice – US, Sales Exec - who works with customers to help leverage HP technology to enable better business outcomes and make the Smart Choice- outlines some of the concerns that IBM customers have.


It’s easy to adopt a wait and see attitude when it comes to the sale of IBM’s x86 server division to Lenovo. H.P. Lovecraft once stated in his book Supernatural Horror in Literature: “The oldest and strongest emotion of mankind is fear, and the oldest and strongest kind of fear is fear of the unknown”. And when it comes to the IBM/Lenovo deal, there are enough unknowns to raise serious questions:  


  • Will the deal go through in view of the US Government review by the Committee on Foreign Investments in the U.S. (CFIUS)?
  • If the deal doesn’t go through, will IBM look elsewhere to offload their hemorrhaging x86 server division?
  • If the deal does go through, what impact will it have on your business critical x86 server environment?
  • Will Lenovo stick to the roadmap that IBM has outlined to customers?
  • Will Lenovo be able to innovate, not just to meet your business needs for the next 3-year technology refresh cycle but after that as well?
  • Will a new IBM/Lenovo support model allow you to meet your business SLAs? Or is it going to cause disruption?

If you’re playing the “wait and see game”, there are 3 good reasons for you to sit up and take notice of what’s going on. Take a moment to consider the effect of the IBM/Lenovo x86 server deal on the following areas:


  1. Impact on Innovation

In an interview at IBM Pulse 2014 in Las Vegas in February 2014, Steve Mills, Senior Vice President & Group Executive of IBM Software & Systems, stated that the strategy of moving x86 to Lenovo was in response to shrinking margins and a market with little opportunity for differentiation. If IBM doesn’t see the x86 server platform as an opportunity for innovation to create differentiation, will Lenovo be able to do any better? After all, many of the same people are involved since the entire x86 server division is due to be transferred to Lenovo, not just the hardware.


HP views the x86 server space as a huge opportunity for innovation around workload optimization. For example, HP Moonshot’s software-defined x86 servers takes innovation to the next level by tailoring the server for specific workloads to deliver optimum performance in a hyperscale environment. By taking the application first, and then custom building a server “cartridge” specifically for that application, HP Moonshot provides the best price per performance per watt for enabling a specific business outcome. Another example is HP OneView’s ability to quickly and accurately deploy, configure, integrate and update an HP BladeSystem infrastructure.


Who said you can’t create differentiation in the x86 server space? The question is: Can Lenovo keep up?


2.  Impact on Support


Lenovo’s main reason for wanting to acquire IBM’s x86 server division is to help it deal with the ongoing slump in PC sales.  Does that mean that the x86 server margin will end up supporting the PC business? Possibly. Customers are already indicating that support contracts of Lenovo systems carried out by IBM are considerably higher than previously. But when you have one company building your x86 server and another one supporting it, your SLAs are undoubtedly going to be affected, especially when those two companies have significant differences in philosophy and capabilities.


And if you’ve been dealing with IBM through one of their channel partners, you won’t be any better off. IBM expects to lose at least 2000 partners as a result of the Lenovo deal. Is one of those 2000 the one that supports you? Other partners are worried that their partnership status with IBM will be downgraded after the deal, shutting them out of many of the perks they enjoy now and impacting the level of support they’re able to offer their customers.


At HP, we design, build and support our own x86 servers. And with 30,000 experts in 170 countries around the world, you can be assured that we’ll be there to provide multi-vendor support as you transition once you’ve made your choice.


3.  The Opportunity Cost


Seth Godin, an entrepreneur and blogger who thinks about the marketing of ideas in the digital age, once said that “the cost of being wrong is less than the cost of doing nothing”. It’s also been said that “doing nothing is the management equivalent of a baby’s soother [pacifier or dummy]. It makes us feel safe and comfortable”[1]. Having a “wait and see” attitude and not doing anything about the IBM/Lenovo deal could cost you as much as $300,000 for every month you delay. With the pace of business outstripping new enabling technology deployment, lower SLAs, high management and facilities costs and the loss of innovation could be bleeding your business. You might question the figure of $300,000 per month. So calculate your opportunity cost of sticking with an x86 server provider who can’t innovate to differentiate, and whose uncertain support  raises doubt on your SLAs in terms of both performance and cost. It might work out for your current depreciation cycle. But what about the next one? And if you have to change your x86 partner at that time, what will the cost be then?


At HP, we do things differently. We are committed to innovation to support your business. And we have the end-to-end support capability, strength of partners and stability to provide you with what you need to drive business growth.


Visit the Project Smart Choice website and request a free half-day consulting session to find out what HP can do for your business.




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Greetings! I am on the HP Enterprise Group marketing team focused on small and midsize businesses.

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