In an end-to-end solution package of service offerings, Lenovo and IBM are teaming up to offer packages of PCs and laptops to servers and software as part of an expanded alliance that the companies announced Tuesday.
“We are taking our relationship to the next level,” said Ray Gorman, head of corporate communications for Lenovo.
An IBM spokesperson added that Lenovo “is a leading provider across the board” for the global technology giant.
Even as public signs – the sale of Lenovo shares at an accelerated rate by IBM and the removal of the IBM name from new ThinkPad laptops by Lenovo – pointed to the possibility of differences between the two global companies, negotiations were underway to develop a plan for an even closer business partnership.
The deal disclosed Tuesday has been in the works for months, Gorman told WRAL Local Tech Wire.
Such an alliance could be good news for the Triangle. Lenovo, one of the world’s top four PC manufacturers, has its headquarters in Morrisville. And IBM employs more people (11,000) in the Triangle than in any one location around the globe.
Two years ago, Lenovo bought IBM’s personal computer division, which was primarily based in the Triangle area, for $1.25 billion. As part of the deal, IBM became a Lenovo shareholder, but it has recently accelerated sale of those shares. Lenovo also acquired rights to use the IBM name on its products, but two new laptop models are branded as ThinkPads alone, not IBM.
However, the alliance announcement is a sign that the firms are drawing even closer.
Under terms of the agreement, Lenovo and IBM sales teams around the world will work together on deals ranging from small business packages to large enterprise contracts. Lenovo has been the “leading provider” of PCs to IBM clients with IBM providing financing and support services since Lenovo bought the PC business. Lenovo and IBM will offer joint products as “Delivered by IBM” with IBM providing technical support.
“Our alliance with Lenovo is consistent with IBM’s strategy to be the world leader in providing technology and solutions across industries and in countries around the world,” said Towney Kennard, general manager at IBM for the IBM/Lenovo Alliance. “Providing high value, industry-specific technology solutions that combine Lenovo’s PCs with IBM end user services, financing and winning solutions offers customers the collective expertise of two world-class technology companies.”
The firms described the joint program as providing “end-to-end technology solutions.”
“This is a significant evolution in our global strategic alliance with IBM,” said Rory Read, senior vice president of operations for Lenovo, in the announcement. “We are committed to bringing the quality and reliability of our core ThinkPad and ThinkCentre technologies to enterprises and SMBs around the globe. Through this agreement, customers will now have the opportunity to include the purchase of Lenovo’s best engineered PCs within the context of their overall technology solutions.”
Financial terms of the deal were not disclosed.
“Customers from an IBM perspective are looking at large enterprise solutions, and at the end of the day PCs will be a part of that,” Gorman said. “From the Lenovo perspective, PCs will be bundled into a tighter network of offerings. It made sense to put these two together.
“IBM and Lenovo have been strategic partners,” he added, “but this is a bit of an evolution. Lenovo and IBM account teams will work much more closely than they have in the past.”
IBM’s Global Services Unit will be part of the alliance. It is responsible for a growing share of IBM revenues as Big Blue continues to move away from hardware to providing solutions and services.
Through the alliance, IBM wants to gain more sales in small business and consumer markets. In turn, Lenovo wants to drive more PC and laptop sales.
The two firms also said they would form a “joint innovation team” to develop products and services for small businesses to enterprises.
Lenovo is locked in a fierce global battle for PC and laptop sales. Acer, which is based in Taiwan, recently passed Lenovo for the No. 3 spot in PC sales, based on one industry survey. HP and Dell are the leaders, although Lenovo dominates sales in China, where the company was launched, with about 35 percent of the market.
To strengthen the company, Lenovo has recently expanded its relationship with Microsoft and Intel, leaders in software and chip development. The new deal with IBM solidifies it as the third of Lenovo’s “key strategic partners,” as Gorman described them.
“It’s been strong and getting stronger,” Gorman explained about the IBM relationship/ “IBM’s selling of shares in Lenovo has always been part of the plan. It was pretty clear IBM didn’t want to be in the PC business any longer. IBM’s selling Lenovo shares has been part of a regular agreement, so there’s nothing unusual going on there.
“However, there are many things going on between the two companies that do have strategic business implications. This announcement really demonstrates that we are taking the relationship to the next level.”
