EMC's Lenovo deal no threat to Cisco tie-up

Tim Stammers/Ovum
15 Aug 2012
00:00

EMC has struck a deal with Chinese PC and server maker Lenovo. The most important elements of the deal are that Lenovo will resell EMC storage products in China, and EMC will provide Lenovo with technical help developing Lenovo’s x86 servers.

The arrangement is likely to provide EMC with improved access to the Chinese market, and has parallels with EMC’s formerly successful resale arrangement with Dell. It does not pose an immediate threat to EMC’s alliance with Cisco, because although Cisco and Lenovo both sell servers, they do so in very different market sectors.

Neither is there an immediate threat in the fact that EMC has linked the Lenovo deal to its already publicized plan to transform its disk arrays into combined server-and-storage devices. That plan is indistinct, and Ovum believes that EMC’s move towards servers will be gradual at most, in order to protect its alliance with Cisco.

Lenovo will open China for EMC

Gaining a large channel to market via a partnership with a giant such as Lenovo would be very useful in any country, but it is especially helpful in China. This is not just because of the importance of establishing a position in the world’s second largest and still growing economy. It is also because in China, local representation of an overseas company’s products is even more useful than in Western countries.

As in other Asian countries, business in China is not completed in the same way that it is in the West. Furthering the appeal of EMC products in China, Lenovo will rebrand them as its own offerings. The deal echoes many others in which western businesses have traded technology for access to developing markets.

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