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

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 …

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After SuperFish got me...

I failed to buy a server. Go figure.

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Anonymous Coward

IBM

Who said IBM was foolish for selling their PC and Server business to Lenovo?

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Anonymous Coward

Re: IBM

Given the death spiral IBM is currently in, IBM is foolish full stop.

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Re: IBM

Who said IBM was foolish for selling their PC and Server business to Lenovo?

What do IBM actually do these days? Based on their inexplicable to-consumer TV advertising, something to do with "business" in white rooms full of racks of boxen (which they don't sell any more... Lenovo), and something to do with Wimbledon.

El Reg - an article for you - explain what Big Blue actually sell!

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Re: IBM

Ah, we bought a product from them on my last product, some cloud integration solution. We replaced it with a custom build tool on open source tech.

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Pay me $10 million

I can tell you PC sales can't do server sales. The options are so different.

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Re: Pay me $10 million

No kidding. I can hear it now: "how many gaming graphics cards do you want on that server? and do you want the cool tribal design RAM heatsinks?"

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tainted brandname

After having my fingers burnt in the past with Lenovo desktops and laptops, I wouldn't go near their servers.

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I'm sure IBM have a spare server sales team they could let Lenovo have.

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I'm sure IBM have a spare knows where there is an unemployed server sales team they could let Lenovo have hire.

FTFY.

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IBM supercomputer class sales teams have long ago found good jobs with other vendors and who are doing quite well.

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Server Purchases

I don't have to worry about this stuff anymore, but for a quiet(?) life: System i or Sytem z - Or for a bit more excitement, DIY whiteboxes with a limited list of good quality components?

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Anonymous Coward

Arrogance of sales management

i would lay this right at the feet of the sales management who, having never sold a damned server in their life, insisted on telling what few experienced server sales droids they could trick into joining the company how to do their jobs.

Additionally, when you just put servers in same bucket as PCs from a compensation standpoint, you end up with lots of PC flingers who can "Hit their number" and never even mention servers. You were TOLD it wouldn't work, but since you have gotten an MBA, clearly you know more than the people who have actually done this before.

The situation could be fixed, but Lenovo middle management will fight tooth and nail to prevent any change to the compensation structure that rewards sales people for ignoring servers and just flinging your crappy, crappy laptops.

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Re: Arrogance of sales management

Their motto is why expend resource on multiple sales calls and actually engage a prospect when anyone can click and order right off the web site :D

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Anonymous Coward

double facepalm

Sell an el cheapo, 2 years max life time to Mr Gullible == sell a server to a sysadmin/CIO

What can go wrong, eh ?

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A lot of the revenue decrease is no more US Federal Government sales

Most of the US Federal Government customers that purchased x86 servers from IBM (and believe me there were a lot) will not purchase from Lenovo, a non-US company. I don't know why they don't create a "Lenovo Federal" company based in the states that is an authorized federal reseller similar to "Hitachi Federal." The crazy thing about this is just about all the components in these servers originate from Asia to begin with so I don't really see what difference it makes where the company is headquartered.

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Re: A lot of the revenue decrease is no more US Federal Government sales

I take it you may never have done business with the US government. Supercomputers remain a defence item in the minds of congressional protectors. Keeping Cray in business and killing off 'Japan Inc' was their top concern in the 1990's when Japan had a few far more capable (and stable) offerings. Nothing has changed. The US will be superior or put up the walls or change the rules as necessary to keep it that way (in their minds). Regardless of how accurate those claims, anything else will be accused of being fake news or summarily dismissed.

The developments in China with their home grown chips and software will cause apoplectic fits in US government when they mature and internationalise.

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Not just a sales problem, poor quality and services too

We were an x86 IBM customer since 2010. After the transition Lenovo we started experiencing quality problems. Servers came in as death on arrival, more and more configuration work was necessary to get a new server up and running. Service was close to zero. We once wanted to repair a blade server, we were offered repairwork at CHF 600.--/hour (~€ 530.--), performed by IBM as they were still doing these services for Lenovo. We have now switched to HPE servers enjoying the much easier setup process and management software as well as excellent services.

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Anonymous Coward

Having seen this debacle up close...

Lenovo's PC and laptop focused senior marketing and product management are the real root cause here.

They used a flawed mentality that fatally misunderstood the server marketplace, and failed to capitalize on unique opportunities and a crop of low-hanging fruit that was there for the picking as soon as the System x business was unburdened from IBM.

For one example, at IBM, System x was systematically deprived and sealed off from the burgeoninng opportunities in hyperconverged and Server-SAN, because this business was seen as cannibalizing IBM's existing hardware-defined storage. At Lenovo, with the IBM 'shackles' removed, the obvious first, best move would have been to embrace Server-SAN and hyperconverged. Consider that Lenovo had absolutely no storage business and no revenues or profits to be disrupted. This made them unique among all the top tier server makers, able to address a huge and disruptive marketplace with abandon.

Instead of focusing on making rapid and substantial moves in the Server-SAN business when the window of opportunity was wide open, Lenovo management dawdled, debated, argued and dallied with trivial initiatives, none of which came to meaningful fruition. Now that window is closed.

Of course you will never hear any Lenovo management who are 'authorized to speak' admit to this monumental stupidity. Easier to blame the salespeople.

The blame for Lenovo's failure-to-launch in the server business rests squarely on the shoulders of senior management in North Carolina. It was management's failure to understand the dynamics in the business, and it's failure to understand the opportunities it had once System x was removed from the oxygen-starved environment in IBM that caused this epic fail.

Yuanqing, are you listening? Other opportunities still exist...but you need to clean house in NC and find people who understand them.

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