IBM’s Sale to Lenovo : What does it all mean?

Ever since IBM’s Announcement back on January 23, 2014 , we’ve had oodles of clients asking us what the sale entails and what it specifically means to them. Well to put it frankly, right now it doesn’t mean much of anything. Until this deal is finalized (projected Q4 2014) , IBM is continuing business as usual.

IBM has never been able to conquer the “low cost” manufacturing and supply chain techniques. Lenovo however, has worked wonders with their strategies, increasing their revenues by 15% in Q3 of 2013 on their last buy from IBM, IBM PC’s. Lenovo’s plan is to do this again with the X server line.

Why? Big Blue knows that Lenovo can leverage their supply chain skills and lower-cost manufacturing to repeat the success they had with the PC market,  with the  X86 servers, in the end, hopefully resulting in better pricing for X86 customers.

  Slide 1

 

So what does this sale actually include?

Lenovo will acquire

  • System x racks and towers
  •  x86 BladeCenter
  • x86 Flex System blade servers and integrated systems
  • IBM NeXtScale
  • System X6 high-end servers
  • plus associated switching and maintenance operations on the above products as well as software that uniquely supports x86 such as FastSetup, ToolsCenter, Upward Integration Modules, and Blade Center Manager

 

IBM will retain

  • System z mainframes
  •  Power Systems, Storage, Power-based Flex servers
  •  PureApplication
  • PureData Systems

IBM will also retain ownership of the system software that supports both the x86 and IBM Power® server businesses (cross-brand) such as  IBM Systems Director and IBM Flex System Manager.

IBM will also continue to develop and evolve its Windows and Linux software portfolio for the x86 platform

 So what will happen with maintenance agreements that existing clients already have with IBM?

Following the closing of the transaction (estimated Q4 2014) eligible in-scope maintenance agreements will be assigned to Lenovo. Lenovo will then be responsible for related customer service and maintenance options and will also sell maintenance for x86 products. IBM will continue to provide Technical Support Services (TSS), including warranty service, hardware maintenance, software support for x86, and around-the-clock support for critical issues, as required by Lenovo’s clients, under the terms of a five-year maintenance services agreement with Lenovo

IBM’s main goal is to limit any changes to their customers, one way they plan to do this is by having their  7,500 employees of the System x Division move over to Lenovo. This will include service and support personnel as well as those who work in development, sales and marketing, finance, legal, supply chain, operations, manufacturing, and IT. This will help maintain IBM’s consistency in service and support.

Slide 1

So contractually Lenovo will own the relationship with you, but IBM will still provide the same support as they always have so customers will not see a change in maintenance support.  For all x86 customers, IBM’s services mission statement remains the same “to provide superior technical support and services for all x86 clients including complimentary services to our standard warranty clients.” Lenovo knows devices and IBM knows services, so this really is a strategic partnership that should please new, as well as existing customers.

The two companies will operate independently until the deal is completed later this year. And after that, the two companies will work together to sell combinations of Lenovo and IBM hardware and IBM software into current enterprise accounts. Lenovo will be responsible for related customer service and maintenance options and will sell maintenance for x86 products. IBM will continue to provide Technical Support Services (TSS), including warranty service, hardware maintenance, software support for x86, and around-the-clock support for critical issues, as required by Lenovo’s clients, under the terms of a five-year maintenance services agreement with Lenovo.

Slide 1

Will this announcement affect how I buy x86 offerings from IBM Business Partners?

After the close of the transaction, IBM will assign business partner agreements for in-scope products to Lenovo. These Business Partners will be able to continue to resell the in-scope products that Lenovo will acquire with this agreement.

 

Have any specific questions about this sale and how it directly affects your X86 products? Contact us anytime at kmartir@metrotsg.com

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