EMC Lenovo Deal Raises Questions For EMC-Cisco VCE Partnership

EMC’s landmark joint server/storage pact with Lenovo this week raises questions for the EMC-Cisco VCE partnership, according to solution providers and industry watchers.

Under the terms of the new EMC-Lenovo relationship, Lenovo servers will be the preferred server platform in EMC's VSPEX reference architecture for building converged infrastructures.

Some partners and analysts say the deal raises the specter that EMC is trying to distance itself from VCE partner Cisco.

[Related: Dell Kicks EMC Off Its Line Card, Turns To Its Own Storage Tech ]

Jamie Shepard, executive vice president of technology solutions at ICI, a Marlborough, Mass.-based solution provider and long-term EMC partner, said the deal opens the door for EMC to take control in the server space, without having to rely solely on Cisco. ’What EMC has been trying to do is separate themselves from the VCE correlation,’ he said.

"EMC is not VCE,’ added Shepard. ’It's its own company. That's why it came out with VSPEX. So, now it's better for EMC to move with Lenovo on VSPEX than it is with other servers."

Aaron Rakers, an analyst with St. Louis-based Stifel Nicolaus, wrote in a research brief on Wednesday that he expects the move to "again raise questions over the VMware/Cisco/EMC (VCE) partnership; following VMware’s announced acquisition of Nicira for Software-Defined Networking (SDN), which looks to compete with Cisco spin-in Insieme."

Brian Alexander, an analyst with St. Petersburg, Fla.-based Raymond James Financial Center, on Wednesday wrote that the EMC-Lenovo partnership might "suggest that the relationship between EMC and Cisco has become more tenuous as Cisco offers servers that are sold in conjunction with EMC storage as part of Vblock."

But, Rod Mathews, senior director of new business development for EMC, said Cisco and Lenovo servers offer different types of use cases. "Cisco focuses on data center infrastructures," Mathews said. "Lenovo is more focused on the volume side. They are complementary partnerships. There are great use cases for both. Customers at the end of the day will choose what server platforms to use. But in our view, Cisco and Lenovo have two different focuses."

Cisco agrees, according to a Cisco spokesperson who emailed CRN with a statement that read, "Lenovo and Cisco play in completely different segments of the server market. The announcement will not impact our close partnership with EMC.’

NEXT: How EMC, Lenovo Will Partner In VSPEX

All that said, EMC will specify Lenovo servers in EMC's VSPEX reference converged infrastructure solutions. With VSPEX, EMC is starting to offer a series of blueprints that specify how channel partners can configure server, storage and networking combinations to meet customer requirements for specific applications.

"Our plan is to build in Lenovo servers as part of the blueprint," Mathews said. "We will be very focused on Lenovo servers. Customers at their own discretion can select other servers. But, it will be natural for many of our partners to use Lenovo servers. A large number of our VSPEX channel partners already work with Lenovo in North America."

Mathews said he could not be specific about how many of EMC's solution providers also partner with Lenovo.

EMC will not jointly market or sell the Lenovo servers, Mathews said. "But, VSPEX and how we roll it out will be a kind of joint marketing," he said. "As Lenovo brings these servers to market, we'll turn on our marketing materials."

For Lenovo, this becomes a potentially huge opportunity to grow its North American server business, a business that has not done well in the wake of Lenovo's late 2004 acquisition of IBM's PC Division.

"We've been clear on the need to expand our server business beyond China," said Peter Hortensius, senior vice president of Lenovo and president of the company's product group. "We needed to expand our product offering and our marketing capabilities. Over time, we'll see more efforts as we build this out. This is a statement about growing our server business."

While IBM in 2008 licensed its server technology to Lenovo, Lenovo's share of the North American market remains "very small," said Hortensius.

That’s one reason why a number of partners believe the EMC-Lenovo pact will have little or no impact on EMC's relationship with Cisco or on their joint-venture VCE business.

Steve Kaplan, vice president of data center and cloud solutions at Presidio, a Greenbelt, Md.-based partner of EMC and of Cisco, said he never sees Lenovo in deals where his company is talking to customers about Cisco UCS servers.

"We position UCS not as a server but as an optimized hosting platform for virtualized and cloud infrastructures," Kaplan said. "And as such, there is no competitor out there."

Kaplan said he sees no sign of a rift between EMC and Cisco or in the VCE relationship.

NEXT: Dismissing Fears Of Potential Impact To Cisco, VCE

The data center has traditionally been a series of storage, server and networking silos and virtualization is breaking those silos down and making multiple strategic relationships between different vendors possible, Presidio’s Kaplan said.

"Today, servers, storage and networking are getting more intertwined," he said. "And, the demand for new technology is expanding as the technology itself expands. So, there's a lot more opportunities for partnerships. So, I don't see a change in Cisco's and EMC's relationship, at least in the short term. Same for VCE. These relationships are growing."

AJ Ragosta, vice president of sales and marketing at Varrow, a Greensboro, N.C.-based solution provider and partner to EMC, Cisco and VCE, said his company remains committed to selling Cisco's UCS servers. "I've never heard of us running into Lenovo," Ragosta said. "I see little to no overlap between Lenovo and Cisco."

One solution provider, who requested anonymity, said in an emailed response to CRN that Lenovo doesn't have a prayer in the U.S. market with servers even though it is doing quite well with desktop and mobile PC sales.

"I think [Lenovo is] the clear #1 in the commercial and enterprise space. As for EMC I see nothing catching between the two and don’t know what is in it for EMC. I doubt it would present any value to us. As for the sordid relationships between OEMs, ... I would have a better chance of understanding a 70s swinger party than EMC, VM, Cisco, IBM, NetApp and how those relationships work," the solution provider wrote.

That solution provider wrote that Lenovo will likely not do well with the EMC relationship in the U.S. market because Lenovo does not have a strong brand presence here. "And that is not something you develop overnight, just ask Cisco. Commercial customers do not like [unknown] platforms particularly without a very compelling reason," he wrote.

Douglas Grosfield, president and CEO of Xylotek Solutions, a Cambridge, Ontario-based solution provider and Lenovo partner, wrote in an emailed response to CRN that vendors in the x86-based server market have been working towards simplifying their businesses to varying degrees of success.

"Lenovo decides it is time to step up their game once again, and partnering with one of the foremost giants in storage technologies in EMC shows Lenovo’s commitment to the direction they are taking in expanding their offerings in the server and storage space. ... This is an aggressive move on both Lenovo's and EMC’s parts. This will open the door for a higher level of integration and competition, providing partners like Xylotek with yet another cohesive solution offering to present to our clients," Grosfield wrote.

Kristin Bent, Chad Berndtson and Scott Campbell contributed to this article.

PUBLISHED AUG. 2, 2012