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Exclusive interview: The story of Lenovo's data center business
Tue, 13th Mar 2018
FYI, this story is more than a year old

Lenovo is more than just a manufacturing company that sells ThinkPads and PCs, and it's not a Chinese company, it's multinational, with a diverse leadership team that reflects that.

That's the word from Kamran Amini, the company's server and storage general manager. While sitting down with TechDay at Lenovo's Executive Briefing Center in Stuttgart, Germany, Amini was quick to shoot down any misconceptions of Lenovo.

“There was a lot of fud created by our competitors that Lenovo is a Chinese company. It's a multinational company. If you look at our senior leadership team today, it's 7 nationalities,” he states.

After introducing a few Intel executives to its leadership, and taking over IBM's server line in 2014, Lenovo is steadily increasing its brand as a data center provider.

"We have bought a lot of individuals in from HPE, Cisco, and Dell – we brought in a collective of people that know how to run data centers.

“And we've seen results from this as well, if you look at our last three quarters we've continued to show growth every quarter by quarter, both in revenue and profit. We're seeing a momentum establish."

In this exclusive interview, Amini is joined by Lenovo's High-Performance Computing (HPC) and Artificial Intelligence (AI) executive director Scott Tease, and Rob Makin, the company's Data Center Group general manager.

Amini discusses his fear of the cloud, Tease touches on what buying IBM's server line did for Lenovo's data center business, and Makin continues the conversation on Lenovo's image and growth as a data center provider.

What are some of the most significant changes Lenovo's Data Center Group has experienced over the past few years?

Makin: “Of our $44 billion business, probably $38 billion of that is our PC business.

"As a company, we had to separate our focus. As a data center business, the go-to-market is very different from the PC business: from the perspective of a salesperson, the DNA, the conversations you're having - so we started investing in a specialization in [the data center] space.

“In ANZ, from April 1st last year, we separated from our PC business, not separated as in an HPE and HP way, but just creating a separate operating model."

"What that enables us to do is have really focused conversations - everything we do now has a data center focus and spin on it.

“And we've seen some great growth globally, in ANZ in particular. These aren't just my figures here, they are IDC's figures - We've had 8 quarters of consecutive quarter on quarter growth.

“That comes down to our message getting across. We've had some great growth in HPC in ANZ and that all stems from our leadership and direction."

Tease: "People once thought Lenovo was just a manufacturing company.

“They thought of Lenovo as having a profitable business selling ThinkPads and PC products.

“For a lot of our vendors, we are their biggest single customer. For the Data Center Group, we've finally been able to take the value of that and merge it with the deep relationships and the deep expertise and the vertical knowledge we've bought over from IBM."

"We've blended that all together and it's really starting to show in a positive way for our customers."

Did IBM's brand and reputation as a server business wash off onto Lenovo following Lenovo's purchase of IBM's server lines? Did Lenovo continue to win the same big deals?

Tease: "IBM had an HPC business, Lenovo did not, so we took their entire HPC business along with all the rest of System X and set up shop inside of Lenovo. Lenovo had a small server business, a few hundred people.

“Very quickly we were able to merge the Lenovo capabilities with the IBM capabilities, and we've been growing very quickly, doing a lot of very big wins, and seeing a lot of good growth since then."

Kamran: "If you look at Lenovo, and our Data Center Group and our brand awareness, you'll find it's very low.

“Part of that is because we don't advertise, we don't have TV commercials or newspaper ads. But you're about to see a more aggressive marketing campaign for our fiscal year starting in April where we are going to be driving more awareness.

“When you have the engagement with the clients, they understand the technology and the value you're bringing in, it's just that the broader space has never had any experience with System X or Lenovo and doesn't know what we can bring to the table.

"Most of the time if you talk about Lenovo, it's about PCs, you don't associate Lenovo with data center provider. That's one thing we're about to change."

How are you going to do this?

Amini: "Mainly through social. There are lots of industry events we will attend, but I think it's more on how you reach people and for our society today, social has been a key factor in creating awareness. That's something I don't think we've been very aggressive in as an organization."

Makin: "It's our customers are talking about us as well.

“We've invested in the SAP infrastructure and the partner ecosystem in Australia. We've gone from three years ago when I presented the Lenovo Data Center Group story to a SAP user group, bearing in mind we had over 50% market share in SAP Hana back then, yet no one knew that Lenovo did this in the data center space - they just thought we're had a great ThinkPad.

“Fast forward two years and all of a sudden you've got our customers, some of the largest retailers in the market, standing up and talking about how they've migrated to SAP Hana with Lenovo.

“That is far better than us standing up and talking about ourselves, we're using our customers and partners to talk about us. We're gradually building our momentum up."

Tease: "When you went to talk to customers as a provider with IBM, you didn't have to convince people why they should talk to you. You got a free pass that what you're going to bring in would be valuable to them.

“With Lenovo, we don't have that same free pass to just go in and talk to people in the data center. We have to earn our right to talk to people and that's why I think you are about to see a lot of very disruptive ideas about how we want to do things differently in the data center.

Makin: "Legacy free helps. We've got a storage business, however the mantra we believe in is - if you're designing a data center it has to be done software-defined."

"We go in there with our portfolio of products, our partnerships, but we actually don't compete. If you stack up the other server vendors in this space, our competition, they've all got competing technologies and it's confusing to customers.

“I sit in front of customers and see how some of our competitors have gone in there with five specialists all pitching slightly different technology that's all owned by the same company. We go in with a very clear message. Our message out there is really important, and right now, it's showing that we're winning."

Kamran, you've spoken in the past about your fear of the cloud, and also your belief that traditional data centers will never be obsolete. Can you elaborate here?

Amini: "The conversation around fear of the cloud is because the economics to get to entry-level cloud is cheap typically. That's what AWS, Google and everyone else tells you. The problem is - that's exciting; everyone thinks why should I do it in-house, just push it to the cloud.

“The challenge is, that philosophy doesn't work with every aspect of the business. A couple of years ago one of my clients developed software to do taxes in the U.S. Their CIO had three data centers and he said 'Everything is moving to AWS. We are not going to buy single hardware.' A few years later they moved from two data centers to three. They began to realize that certain things can move to the cloud and be built on AWS, other things have to still be on-prem."

"But if you look at three years ago, his philosophy was no more data centers."

"That's where the fear is. There's a perception of greatness, but that's at the high-level, you've got to dive deep to figure out what makes sense for your business."

"For us, it's been about focusing on three key areas: we have to deliver on-prem technology; we have to be able to deliver cloud technologies for public cloud providers; and we also have to be able to provide them the path to get from their on-prem, private to a hybrid environment if they want to."

"That's where I think we are positioned well. But I'm always fearful, I think if you don't fear around you, you're never going to be successful. If you think you're the best, you will set yourself up for failure."

"One of the things we always say is that we want to be the trusted partner to the data center. You'll never see any chart from Lenovo, internally or externally, that says we want to be number one in server business."

"We believe the way we build trust and relationships is what will lead us into the future."