Resellers give Lenovo and IBM alliance thumbs up

Resellers give Lenovo and IBM alliance thumbs up

The sale of IBM's PC business to China's Lenovo group for $US1.25 billion (AUD$1.6 billion) has been greeted with overwhelming support by the Australian channel.

As part of the agreement, the two companies will enter an alliance under which IBM becomes the preferred services and customer financing provider to Lenovo, and Lenovo the preferred supplier of PCs to IBM.

The deal is expected to transform the Chinese manufacturer into the world's third largest PC maker.

Resellers contacted by ARN have backed the vendor's decision to pull out of the rapidly commoditising PC market, claiming the deal could pave the way for local margin and efficiency gains.

Southern Cross Computer Systems (SCCS), CEO, Mark Kalmus, said the benefit to resellers would be the pricing structure Lenovo would be able to push through while still utilising the IBM brand.

"There is potential for increased margins and better supply chains and logistics," he said. "Being a smaller company in Australia, Lenovo will be able to make decisions on price much quicker and keep stock here to buffer some of the shortages we are seeing come out of China."

SCCS is a Melbourne-based integrator dealing with both the PC and server side of IBM's business. Kalmus said he believed the vendor's decision to sell off its PC division came down to price.

"With the size of IBM's infrastructure, I don't think they could support the pricings and margins you need to be competitive in this market," he said.

Channel Connect executive director, Peter Low, agreed the buyout would bring down the price of IBM branded hardware.

"We have focused on IBM's technological smarts rather than the price," he said. "But if price is less of a barrier [as a result of this deal] it will just make it an easier sell.

"If Lenovo can pass some supply efficiencies on to the channel as well then it is going to make the whole sales cycle easier."

Synnex managing director, Frank Sheu, said the new ownership would strengthen its PC business. But he claimed the deal signalled the demise of branded PCs in the market.

"If a large whitebox assembler like Lenovo can by a big branded company like IBM, then it is sending a message to the channel that branded PCs products no longer carry as much weight as they used to," he said.

"PC technology has come to the stage where the differentiation between branded and unbranded is so small that it is really about marketing, service and operational excellence."

According to an IBM Australia spokesperson, Lenovo would inherit all of IBM's relationships with its PC business partners. However, these would be assessed and renegotiated where appropriate.

However, Smith said he doubted there would be major changes to IBM's PC channel.

"They are not going to buy a business just to dismantle it, so they will need to engage the current channel rather than reinvent it," he said. "There is no risk if you are performing and if there is any consolidation it will only help the people who really want to sell the products."

For more on this story, see this week's edition of ARN.

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