Lenovo PC + era acquisition of IBM x86 server business for what?

January 23, 2014 Lenovo's Spring Festival Annual Meeting, Lenovo president Yang Yuanqing announced an exciting news that Lenovo 2.3 billion acquisition of the IBM x86 server business, of which about 90% of the amount paid by cash, and The remaining 10% will be paid in stock. Products covered by this transaction include x86 architecture system networking products such as BladeCenter, Cluster, IBM Flex System, System z, IBM PureFlex, and System x, while intangible assets include part of the intellectual property related to the x86 server. The 7,500 regular employees And 1,500 contract employees, will certainly have a stronger "chemical reaction" when IBM's potential employees are integrated into Lenovo's extended family.

Lenovo president Yang Yuanqing

Following Lenovo's acquisition of the IBM PC division in 2005, Lenovo is again partnering with IBM, another big task for Lenovo in implementing its PC + strategy. With Yang Yuanqing disclosed that this transaction takes a few months time to get through the acquisition of the United States Foreign Investment Committee, the European Commission and the Ministry of Commerce and other relevant approvals to pass, but from the current situation is basically "only owe the east wind" momentum.

From the perspective of the global server market, Hewlett-Packard is known for its enterprise class and its shipments rank the first place in the world with 26.7% of the total. However, Dell, through privatization, has gradually shifted to the enterprise level, with shipments of less than 20% ranking the second in the world. Lenovo through this acquisition will get more than 14% of global market share, ranking third, while in the domestic market, Lenovo will get more than 22% market share in the first place.

Why enter the enterprise-class products?

All companies are profitable goal, Lenovo is no exception, in the highly competitive PC market and mobile Internet market, how to get out of tight encirclement is a very important part. In the media interview after the Spring Festival annual meeting, Yang Yuanqing said that the gross profit margin of mobile Internet and PC business is not high, while the profit margin of enterprise x86 server can reach more than 20%. Such high profit is enough to impress Lenovo's heart.

On the way to enter the international market, Lenovo took eight years to consolidate, stabilize and turn around the IBM PC business acquired in 2005. Most of the time in eight years was used to familiarize itself with the international market. At the same time to develop their own management capabilities, and with these experiences, Lenovo will be more handy for the international server market, while less detours, IBM x86 server business to be more quickly integrated into the Lenovo Group.

What is Lenovo want?

In mid-2012, Lenovo integrated its own server business and introduced the ThinkServer family of products. Although it followed the Think brand, it did not achieve much success. This shows the importance of core competencies. In my opinion, Lenovo wants this core competency, and the so-called core competitiveness is nothing more than these aspects: market share, brand, technology, customer resources and other points.

Lenovo's acquisition of IBM x86 server business, the first to get 5 years of IBM brand rights, due to the high impact of IBM servers in the market, which means that within 5 years Lenovo can get the majority of server users, and Five years enough to make Lenovo server business grow up, just like the acquisition of the ThinkPad brand after the same growth path.

Mentioned above, this acquisition includes part of the x86 server-related intellectual property, which will also solve a lot of Lenovo's lack of server technology, enabling it to produce more user-trusted products. At the same time, IBM 7500 employees and employees with 1,500 contracts will give Lenovo a credible answer in terms of technology and design.

IBM x86 server market in the global market has a very good, with 8.1% ranked third in the world, for the customer resources, it is quite rich, Lenovo's acquisition not only from the product and technology infiltration, presumably in the customer Resources will also have some action, as a result, a good product, a large customer, Lenovo is based on sales and after-sales, making money is not too difficult.

Business-level layout also need those elements?

Currently in the enterprise market, enterprise-level solutions, end-user computing, software, services, the potential for four-line concurrency has trumpet, HP has begun to follow this path in an orderly manner. Dell has also been privatized after the enterprise-level market, which began in 2012 acquired more than 20 software companies such as Wyse, and set up a Dell CCC department integrated resource service users. From Lenovo's point of view, its hardware will be strong since the acquisition of IBM x86 business, and other converged products have achieved success through acquisitions and partnerships, but Lenovo is a bit weaker in terms of enterprise-class solutions and software. If the product is a foundation, then the software is the foundation of the building above, the solution is the design of the building, the strength of the software, the solution strength determines the height of the building. From the current point of view Lenovo if you want to go further in the PC + road, but also need to strengthen enterprise-class software development efforts and industry needs of users to solve the way for Lenovo to bring more customers and profits.

IBM x86 business acquisition all the benefits?

I do not think so. A company that specializes in one thing and one market makes it easier to penetrate the product and make it easier for users to buy it, like Apple, whose research and development and sales of consumer products go without saying much. The current consumption of Lenovo both hands grasp, but also want both hands must be hard, from the author's point of view, there is a great difficulty, this point from the Hewlett-Packard, Dell's course of the two companies can see clues. Judging from the current situation, Lenovo wants to fully attack the consumer-grade and enterprise-level markets, Lenovo's core competitiveness to see the shipment is not a problem, but the consumer-level beat Apple, enterprise-class beat HP, there is a Long way to go.