At the end of last week Lenovo announced its intention to acquire Infinidat for an undisclosed sum. It’s an important move which will enhance its role as an international enterprise server and storage systems vendor in a challenging year. With a new (old) US president coming through the door, Chinese suppliers will find it even harder to thrive in the US market than before; so acquiring an impressive private US-based supplier should help Lenovo politically. Lenovo’s strategy has always been to add value by acquiring product lines, which included IBM’s PC and System x businesses. Infinidat’s offerings will help widen its relevance to customers all over the world. It may also reduce both the residual business System x customers have with IBM for storage systems and NetApp storage system sales tied to the Lenovo/NetApp partnership.
My Figure above shows worldwide market shares for servers and storage systems for the year to the end of third quarter 2024. It shows that:
- Lenovo with a 3.3% share of the server market was the strongest of the Chinese suppliers,
- Infinidat’s 0.3% share of the storage systems market is tiny, indicating that Lenovo is acquiring it more for its IP and offerings than its installed base.
If executed well Infinidat will help establish Lenovo as a modern higher-end storage systems vendor.
Over the last year 44% of all storage system and 42% of server sales were made in the Americas – proportions that have been slowly growing for the last 20 years… and of course the USA is by far the largest country in the region. Chinese suppliers have an increasingly difficult challenge of overcoming the increasing political restrictions of doing business there. As Lenovo is already significantly ahead of the other three (see my Figure above) in terms of its participation, it also has the most to lose from the increased nationalist views of the incoming President. Although less important than improving the relevance of its storage systems strategy, I believe that acquiring Infinidat will help Lenovo’s credentials in the US market at a vital time.