IBM explains life after Lenovo

LAS VEGAS — IBM is getting out of the personal computing business by selling it to Lenovo Corp. of China, but the division is still having an impact on the company’s annual PartnerWorld conference.

Whether it was the introduction of

Lenovo chairman-designate Yuanqing Yang at Monday’s opening session, a display of Lenovo PCs at the solution centre trade show or the anticipated address Wednesday of Stephen Ward, the current general manager of the PC division and new Lenovo president, the unit is sharing the spotlight here with the other work IBM wants partners to increasingly turn their attention to.

Part of the value of the US$1.8 billion sale, expected to be completed in April, is to keep the IBM reseller channel open to Lenovo.

In his opening remarks Don Atkins, IBM’s global general manager of business partners, took care to note that PC revenue through its resellers increased 20 per cent last year over 2003.

“Is there any question that you and the PC business are still a critical part of our total value proposition to customers?” he asked.

He reminded the estimated 2,750 partners from around the world (including 167 Canadians) that even after the sale closes IBM resellers will get credit for selling IBM-branded desktops and laptops that are now sourced from Lenovo.

Still, of Big Blue’s US$96 billion in annual revenues, 48 per cent comes from services and only 32 per cent comes from hardware.

That’s why in detailing the company’s priorities for 2005 Atkins emphasized resources for pushing VARs and ISVs to build more software and deliver more services than ever. New or improved programs include:

• SystemSeller, a new packages of servers and storage so partners can get “competitively every-day pricing” on single units of hardware faster than before and in configurations customers want. Among the advantages, Atkins said, was “more predictable margins.”

Initially the program will cover iSeries, xSeries and pSeries servers, as well as BladeCentre and TotalStorage products. Later this year it will include financing and, services and software.

Currently, 84 per cent of iSeries, 76 per cent of xSeries and 66 per cent of pSeries servers are sold through partners.

• Express Portfolio development initiative, a new technical framework to help ISVs and solution providers create and manage products for mid-size businesses. Express is a line of IBM middleware tailored for deployment in small and middle-sized companies.

• A “Built On Express” logo and marketing initiative to emphasize applications created on the Express platform. Under this program integrators and ISVs will have access to technical support online from IBM.

• The expansion of its Industry Networks program for ISVs to now include fabrication and assembly, media and entertainment, wholesale distribution and education and learning sectors.

Atkins also said that the company is challenging its partners to sell US$2 billion worth of Linux-related business — double the goal he gave them last year. They beat that target, he added, by US$120 million.

To help meet the new goal IBM will announce VAR incentives later this week.

With details of the Lenovo deal still being worked out not only with IBM but with distributors who will carry the new PCs and laptops as well, many hope that Ward’s appearance Wednesday will clear up some mysteries.

Many IBMers making the move haven’t been told in detail what their salaries and benefits will be, but sound enthusiastic.

“I see an opportunity to move into growth areas in other parts of the world,” Ric Noble, an IBM program manager for business partner enablement, said in an interview.

The merging of IBM and Lenovo’s PC marking, research and development teams “should provide us with innovative products over and above what we have today,” he said.

Anthony Kerr, North American geography manager of the IBM PC institute, the company’s training arm, said he was looking forward to the move. “I’m a person who likes change,” he explained.

At the solutions centre, alongside IBM branded ThinkPads — a name that Lenovo will inherit — were Lenovo-branded PCs the company sells in China. It may market them through IBM resellers here, so the company took the opportunity to show two models, a basic PC and a multi-media version with a VoIP phone, to gauge partner reaction.
Although early in the show, Samuel Dusi, IBM’s director of brand marketing for the PC division, said reaction was favourable.

“I think the thing they (resellers) respect is that when you couple the ThinkPad name with (Lenovo’s) desktop design, it brings together two well developed teams.”

In an interview Atkins agreed that it’s “very important” IBM resellers not abandon Lenovo. He also noted that the two companies have agreed to do joint marketing campaigns.

“I expect partners will see this as a natural transformation,” he said.

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Howard Solomon
Howard Solomon
Currently a freelance writer. Former editor of and Computing Canada. An IT journalist since 1997, Howard has written for several of ITWC's sister publications, including Before arriving at ITWC he served as a staff reporter at the Calgary Herald and the Brampton (Ont.) Daily Times.

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