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2 minute readIBM Sells Servers to Lenovo – Is Storage Next?

IBM is selling its x86 server business to Lenovo – is storage next? According to IDC, IBM holds 27.9 percent of the global server market, but server revenue is down 10 percent year over year. And, compared to 2012 market share, IBM’s share shrunk 1.2 percent. HP and Oracle are both off too, with only Dell seeing 10% increases in the x86 server space.

The world thought IBM was crazy when it sold its PC business to Lenovo, but it turned out to be the right call. Going forward I’ll make a prediction…. There will come a day when IBM does not make or sell hardware. The reason? IBM is signaling that it wants to be in and compete in the cloud – linked from its acquisition of Softlayer at $2B, and selling its storage business could be next.

Lenovo could be a great buyer, as they are amping up their storage capabilities with a newly forged alliance with VMWare and EMC. It’s likely that Lenovo would be interested in accelerating storage growth with a purchase. There were hints that IBM was looking to sell its zSeries mainframe business (the holy grail of IBM hardware), so one can speculate that storage is on the table as well.

Some stats from IBM’s 10K, regarding the highly competitive storage business, indicate that it is slipping as well. Storage revenue decreased 11.4 percent and 9.6 percent (10 percent and 8 percent adjusted for currency) in the third quarter and first nine months of 2013 versus the comparable periods in 2012, respectively.

IBM bought Texas Memory Systems for its flash capabilities in 2013, but we haven’t seen a big purchase in the space by IBM. EMC took down DataDomain in 2012 for $2B+, and Netapp bought Engenio for $480M. IBM bought Texas Memory Systems to remain relevant, and got the XIV in 2008 from for $300M from Moshe Yanai. They also bought Diligent for its de-dupe capabilities that are now packaged under the ProtectTier brand.

So the package is complete at IBM and ready for someone to come it and take it off the table.

What do you think? Will IBM sell its Storage business to Lenovo?

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Reid Smith-Vaniz

by Reid Smith-Vaniz

Reid is the founder and CEO of Reliant Technology and for 14 years has pursued his mission to remove the pain associated with maintaining IT infrastructure. Reid writes on common challenges related to maintaining, servicing, tracking, budgeting, and upgrading technology.

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