Lenovo Gets Ready to Shake Up the Server Landscape
Now Lenovo is entering the global server market with its ThinkServer line. And it looks like it is after a very specific vertical the SMB market at least initially.
Presently, the company offers five servers three towers and two racks. These 1- and 2-processor models will be featured in a full server snapshot when complete pricing data is available from the manufacturer. For now, all we know is that the starting price for this line of servers is $749.
This week, we'll look at the big picture and leave all the specifics for a couple of weeks.
The top-two server vendors (IBM and HP) control 60 percent of the market, and the top five account for all but 11.8 percent of revenue. That doesn't leave much wiggle room for a new entrant.
That won't bother Lenovo though, as the company has quietly but successfully edged its way into the desktop and workstation markets with its ThinkCentre and ThinkStation lines. Note the naming conventions ThinkPad, ThinkCentre, ThinkStation and now ThinkServer. Very smart. ThinkPad is a trusted brand, and Lenovo has done a good job in maintaining quality and brand integrity since it took over stewardship.
The company also retains a good relationship with IBM, which can only help in the U.S. market. Presumably, IBM reps and business partners are advised not to "think" too much about what PCs, laptops and servers to recommend the Think line will accordingly find itself provided with many opportunities in the United States. Lenovo has a decent channel presence as well, which will also help.
Another factor in its favor is that Lenovo has actually been making servers for years for the Chinese market. Loosely translated as the SureServer, these 1- and 2-socket models are very popular in what is a massive market. Almost 1,000 of them powered the Olympics, and the company didn't miss the opportunity to let the world know. With most of America tuning in to see Phelps break the gold medal record, the many commercial breaks heavily featured Lenovo logos and ads. So the brand has already gotten a boost. Note, though, that the ThinkServers are not the same as the SureServers.
As for the initial market entry, it is modest but sensible. Lenovo is not attempting to be every server for every need. Just a few towers and racks aimed squarely at the SMB space. No hokey specs or sub-par components either good grade Intel Xeon dual-core and quad-core, as well as Core 2 Duo chips, for example. Presumably, once we get the complete pricing, the servers will measure up well against their counterparts from Dell and HP. I'm interested to see if they try to low-ball their prices or make them just a little higher than the others. My money is on the latter.
Lenovo is rolling in lots of value to appeal to the IT-limited SMB. Software to ease startup, updates and server management is included, and a 90-day trial for support is a wise addition. If it's good, Lenovo will earn plenty of additional dollars.
Tom Tobul, executive director of the Enterprise Business Unit at Lenovo, is keeping his cards to himself with regard to the ultimate intentions.
"We are going into this to be successful for SMBs, and to get it right in terms of hardware, software and end-to-end ecosystem," he told ServerWatch. "Beyond that, let's talk in six months when we see how it is going."
So while this seems to indicate Lenovo does not have the aim of ousting IBM and HP at the top of the charts, it is probably hoping to take away some low-end business from HP and Dell.
The OEM that probably should be the most worried is Fujitsu. It has worked hard to get a mention in the quarterly server charts. But its meager 4 percent share means its number five spot is precarious. Lenovo may well be after it. If Lenovo succeeds, watch out Dell and Sun, which have been stalled at a little over 10 percent for quite some time.