MORRISVILLE – Lenovo’s beleaguered server executives finally has some good news to savor. After several quarters of year-over-year sales declines and going through a management shakeup, the business group can savor a new report from research firm IDC indicating the worst bleeding may be over.
But the news was even better for IBM, which drove its high-end server revenues up more than 50 percent.
On the day after Bloomberg News published a scathing report criticizing the global tech giant from PCs to servers and smartphones, IDC released statistics showing Lenovo grew server sales substantially in the fourth quarter to just over $1 billion.
That’s a 15 percent improvement year-over-year and is the third consecutive quarter of growth.
Earlier this week at the Mobile World Congress, Lenovo hailed the launch of new products coming off what the company said was the RTP-based server group’s best financial showing in two years. The group has gone through management changes as well as a reworking of its sales force in attempts to stop the hemorrhaging.
“Lenovo is accelerating our telecom and IoT plans based on strong global customer demand,” said Kirk Skaugen, who took over as president of Lenovo Data Center Group in November 2016, at MWC. “Our goal is to earn customers’ trust as the world’s most trusted data center and communications infrastructure provider, unencumbered by the protectionism seen from providers driving proprietary and expensive legacy solutions. We are also thrilled to be hiring some of the best talent in the industry with a focus on expanding on our position as No. 1 in x86 server customer satisfaction and reliability.”
The fourth quarter represented the first billion-plus quarter for the server team in a good while. Quarterly sales never topped $900 million in the first three quarters of the year, including a low of $727 million in Q1.
However, despite the surge in sales, Lenovo saw its global market share continue to drop.
According to IDC, Lenovo was responsible for 5.3 percent of all sales. That’s down from 5.8 percent a year ago. Although its share improved slightly from 5.1 percent in the third quarter, it is down from 6.2 percent in the first quarter of 2017.
Big blue, industry sales rise
Across the industry, IDC reported that sales surged more than 26 percent year-over-year, driven by demands for cloud computing services. Hardware shipments climbed nearly 11 percent to 2.84 million machines.
Helping spark the surge: A 41 percent jump to $2.9 billion for high-end servers. IDC credits the launch of new IBM Z14 machines for igniting that surge.
In fact, IBM revenues climbed more than 50 percent year-over-year to $2.7 billion.
Lenovo focuses on lower-end x86 servers, much of that business built around the x86 group it acquired from IBM nearly four years ago for more than $2 billion.
HPE and Dell are “statistically tied” for the No. 1 spot in server sales, IDC reports, with market shares of 18.4 percenta nd 17.5 percent respectively.
IBM is third at 13 percent share.
Cisco and Lenovo are tied for fourth place.
The full report from IDC is available online.
Lenovo operates global headquarters in Morrisville and Beijing.