Why Lenovo’s data center revenue dips again

#Lenovo ’s data center financial performance reflects a company seeking to keep pace in a turbulent, highly competitive IT infrastructure marketplace, says Krista Macomber, senior analyst at TBR. The speed at which enterprise customers are migrating to next-generation technologies, such as hyper-converged platforms that fundamentally disrupt foundational data center architectures, has accelerated since Lenovo launched its attack to become one of the world’s largest data center infrastructure providers, which effectively began with its October 2014 acquisition of IBM’s x86 server business. Lenovo revenue at a glance Total revenue $11.2 billion (–8% year-over-year) PC and tablets business $7.8 billion (–8 percent) Phone business $2 billion (–12 percent) Data Center business $1.1 billion (–8 percent) Net income $157 million “Our PCSD business maintained leadership and strong profitability, our Mobile business had good quarter-to-quarter volume growth and margin improvement, and our Data Center business is actively addressing its challenges,” said Yang Yuanqing, chairman and CEO, Lenovo. Lenovo has hired Kirk Skaugen EVP and president of Data Center Group (DCG). Kirk was previously Senior Vice President (SVP) of the Client Computing, Datacenter and Connected Systems groups for Intel. Lenovo also hired Yong Rui as chief technology officer and SVP from his role as deputy managing director leading Microsoft Research Asia. Shipments in mobile phones grew almost 25 percent compared to the previous quarter to 14 million. Lenovo said mobile shipments in India increased 15 percent. Moto shipments were up almost 40 percent from the previous quarter due to Moto G and launches of new Moto Z and Moto Mods. Lenovo generated $3.2 billion from China, $1.9 billion from Asia Pacific, $2.7 billion from Europe, Middle East and Africa (EMEA) and $3.4 billion from the Americas. TBR said Lenovo proceeds in a far more volatile competitive landscape characterized by quickening commoditization of underlying data center hardware systems and a steady shift to longer-term, solutions-oriented and outcomes-supported selling models to a hybrid base of IT and line-of-business (LOB) decision makers.

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