IBM Partners Split On Impact Of x86 Business Going To Lenovo

IBM is shedding its x86 hardware business because it's not interested in selling commodity hardware at razor-thin margins. But many channel partners attending the PartnerWorld Leadership Conference in Las Vegas last week said that IBM System X, Flex System servers and other IBM hardware slated to be sold to Lenovo told CRN they were anxious about the $2.3 billion sale's impact on their businesses.

"I'm still not sure where IBM is going with this deal, or more importantly, where we are going with IBM," said Jim Sulcer, director of technical solutions at Medhost, an IBM partner based in Franklin, Tenn. "There are a lot of questions that still need to be answered. Right now, about half of our business is selling a solution based on x86 hardware. After that business goes to Lenovo, our relationship with IBM enters a new chapter."

With over half of his company's $250 million in revenues going through IBM, Sulcer said he was concerned how his relationship would change after the deal. Sulcer and other IBM partners told CRN they were worried their IBM business migrating to Lenovo would jeopardize their classification as a large IBM partner to one that was smaller. Partners said that might shut them out of IBM perks larger partners enjoyed, such as training dollars, sales performance incentive funds and co-marketing dollars.

Related: 16 IBM Partner Imperatives From Big Blue's Channel Chief

Other IBM partners expressed concern over Lenovo's commitment to develop IBM's X6 architecture designed to boost performance of x86 servers so they can better handle workloads such as big data analytics and virtualization.

"Less than a month ago, IBM was outlining its System x and PureSystem servers and X6 architecture. We need assurances that IBM's X6 road map is supported by Lenovo," said William Smoldt, president and CEO of StorServer, a Colorado Springs, Colo.-based IBM partner.

Other IBM partners are less concerned after attending one of several PartnerWorld sessions dedicated to the transition. Myron Elg, vice president of operations at IBM partner Solutions, based in Spencer, Iowa, said IBM tamped down his concerns over his IBM business going to Lenovo. "We had a lot of worries over this deal, but IBM has done a tremendous job explaining to us how the transition is going to happen and what little impact the move will have on our business," Elg said.

"I'm feeling cool, calm, and don't feel like there is anything to worry about," Elg said. "The channel programs are comparable, and Lenovo is a great brand. We have a high level of confidence the x86 business to Lenovo will be as smooth as bringing the ThinkPad business to Lenovo."

IBM has firmly maintained the blockbuster sale of its x86 business to Lenovo will not disrupt the business of Big Blue channel partners. That message was reiterated at PartnerWorld by both Marc Dupaquier, general manager of Global Business Partners at IBM, and Adalio Sanchez, general manager of IBM's System x business.

As part of the IBM sale, Sanchez's employment transfers to Lenovo along with IBM's System x senior management team, the entire System x development team, and IBM's System x sales and marketing operations, including channel managers and reps. In one of PartnerWorld's most popular sessions outlining the sale of the x86 hardware business, IBM said it will continue to provide maintenance services and support on in-scope x86 products directly until the sale closes, and for up to five years after that.

Responding to IBM's assurances nothing changes post-sale, StorServer's Smoldt said, "Isn't that what President Obama said about keeping your current health-care provider?"

"The glass is half full with the IBM deal, but it's still only at the halfway mark. Time will tell what the impact will be. I already have customers in the government sector voicing concerns over buying servers from China," he said.

IBM said it expects to lose roughly 2,000 partners through the Lenovo deal. X86 is now 85 percent ($4 billion) sold through business partners.

"I'm eager to see Lenovo start selling x86 hardware. Lenovo is motivated, is deeply invested in x86, and is a lot more energized to sell System x. IBM has been acting like it wanted to get rid of that business for the past year. Now we know where IBM stands, and we can start talking to our customers about a re-energized x86 technology sold by Lenovo," said an IBM partner that asked not to be identified.

PUBLISHED FEB. 18, 2014