Lenovo rallies troops after rivals swoop on IBM server deal

The move follows Meg Whitman portraying HP as a 'paragon of stability'

Lenovo will send a memo to its server sales team on Tuesday, urging them to ignore the "uncertainty and doubt" its rivals are sowing over its acquisition of IBM's server division.

"As the old saying goes, those who live in glass houses, shouldn't throw stones," says the internal memo, which was leaked to the press Monday evening.

The memo doesn't name names but Lenovo is likely responding to Hewlett-Packard CEO Meg Whitman, who's said on two occasions recently that she hopes to take advantage of uncertainty surrounding both Lenovo's acquisition of IBM's server business and Dell taking itself private.

"I have to say, we look like the paragon of stability in the industry right now and we aim to capitalize on that," Whitman said at a recent financial conference.

Lenovo announced in January that it will buy IBM's x86 server business for US$2.3 billion. The acquisition is not yet complete, but when it is Lenovo says it will try to replicate the success it had integrating IBM's PC division.

Lenovo bought the declining IBM PC business in 2005 and is now the world's largest PC maker.

It's the other server makers that are unstable, according to the memo to Lenovo's sales force, from the executive vice president of the Lenovo Enterprise Business Group, Gerry Smith.

"Our competitors in the enterprise space are both in the midst of major corporate transitions. As their customers try to avoid the real uncertainty and doubt created by those upheavals, you should feel very confident in presenting Lenovo and the great products and services we offer," he wrote.

Lenovo said it will keep IBM's x86 business intact and offer customers the same products, service and support.

"Most important, we are committed to IBM's product roadmap, and will extend support to end-of-life for any current product offerings. We bought this business with the promise of continuity to customers, both ours and IBM's," Smith said in the memo.

Lenovo's current product line is largely one- and two-socket servers purchased by small and medium-sized businesses. Lenovo was the world's ninth-largest server vendor in the third quarter last year, shipping 57,929 units, which paled in comparison to HP, which shipped more than 669,000.

With the IBM business Lenovo will enter the server big leagues. IBM is the world's second-largest server vendor by revenue, slightly behind HP.

Lenovo hopes to make a splash later this year with new servers based on Intel's upcoming Xeon chips code-named Grantley. One growth opportunity for Lenovo would be in its home market of China, where it leads with PCs, analysts have said.

Agam Shah covers PCs, tablets, servers, chips and semiconductors for IDG News Service. Follow Agam on Twitter at @agamsh. Agam's e-mail address is agam_shah@idg.com

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Agam Shah

IDG News Service
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