Surprise: Lenovo Finally Launching Servers

| About: Lenovo Group (LNVGY)

During a trip to Lenovo's (OTCPK:LNVGY) offices in North Carolina, I found the information I was looking for: Lenovo is leaping from the desktop into the server market, and will launch its first Linux and Windows servers this September.

It's a smart but long-overdue move by Lenovo. Chief information officers at big companies already know Lenovo's ThinkPad notebook brand. So they're familiar with Lenovo's product quality. Now, Lenovo hopes to extend that mind share onto the server, where product margins are better than the traditional desktop and mobile markets.

Next Move

Can Lenovo extend its commitment to innovation to the server? J Scott Di Valerio, president, Americas Group, certainly seems to think so. He told me Lenovo will unveil its servers at Interop, scheduled for Sept. 15-19 in New York.

The server effort will leverage a licensing agreement inked with IBM’s server team in January 2008. Lenovo will offer customers (and partners) a choice of Windows Server or Linux on the systems. Di Valerio says Lenovo is working with two Linux distributions on the effort.

Creating the Perfect Storm?

For Lenovo, the server launch marks the latest step in the company’s business transformation. Lenovo, the world’s No. 4 PC maker, delivered strong quarterly financial results in August. Now, a major marketing campaign at the Olympics appeared to strengthen Lenovo’s global brand.

Still, I beat up Lenovo in May 2008 for lacking a server strategy. Now, Lenovo is finally answering the call for servers. And the company will be working with major distributors to bring the systems to market, Di Valerio says.

Thousands of small business IT managers and CIOs already trust Lenovo’s ThinkPad brand. If Lenovo can extend that trust onto the server, then Dell (NASDAQ:DELL), Hewlett-Packard (NYSE:HPQ) and Sun (JAVA) could face heightened competition from Lenovo.

Disclosure: none

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