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Lenovo thought PC salesfolk could sell servers and was wrong by about $500m

'Over-integration' saw x86 business fail to launch

By Simon Sharwood, 16 Aug 2017

In Q3 2014 IBM had server revenue of US$2.33bn, across x86 and its more exotic architectures. It then sold its x86 business to Lenovo. Fast-forward to Q1 2017 and IBM still had server revenue of $831.5m and Lenovo's was $731.5m. Once you do the math of IBM's old revenue minus Lenovo's current cash count, there' a difference of about 750m.

So where did that money go? Some went into the ether as the server market shrank. Some went to competitors. If we round things to the nearest half-billion we end up with around $500m per quarter of reasonably foreseeable revenue not landing in Lenovo's pockets.

Today the company told El Reg the sales dip can be attributed to “over-integration” with its existing sales teams.

That term was given to us today by Rod Lappin, Lenovo's senior veep for global sales and marketing, who explained it describes the company's early efforts to have its existing PC-centric sales teams sell servers. The company did so because its PC sales team had feet on the ground around the world, and a fine track record too. Integrating server and PC sales was thought to be the way to win.

But it turns out the PC sales people didn't have the right skills or contacts: the company couldn't get in to see the people who buy servers and when it did, didn't know how to sell to them. Which partly explains the sales dip, subsequent restructuring and Lenovo CEO and chair Yang Yuanqing's opinion that the company's data centre business is best described as “showing some signs of stabilization”.

The company's recently-launched ThinkSystem servers and storage, plus the new ThinkAgile hyperconverged kit are hoped to accelerate the turnaround, as are dedicated data centre sales and support teams. Lappin also said the company will soon reveal news of new ThinkAgile appliances.

But the company hasn't given up on the PC connection entirely: execs The Register met today were fond of quoting market share statistics for enterprise IT spend spanning client devices and data centre kit, with their hope being that Lenovo's overall market share will open doors and let its people start conversations about server sales. ®

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