EMC, Lenovo Going After Multibillion Dollar, Post-PC China Market

8/2/12Follow @gthuang

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according to a spokesman. Lenovo, for its part, has some 2,500 employees in the U.S. and a worldwide staff of 27,000.

Lenovo’s server business is doing OK in China, but “we felt like we needed to grow there and take it worldwide,” says Peter Hortensius, the company’s senior vice president of product. “We found EMC, and EMC found us.” (Hortensius, a 17-year veteran of IBM, is based in Lenovo’s North Carolina office but says he goes to China twice a quarter.)

An international partnership between two tech giants in a competitive sector—what could go wrong? The challenge will be to “make sure the working teams really start operating with the intent of the deal, not just what words on a piece of paper say,” says Hortensius. “I have a lot of confidence in that. The complementary fit keeps us aligned by itself.” On the sales front, Mathews adds, “Both companies are channel-oriented in the way we go to market. The model is very favorable for our shared channel partners. It’ll be very natural.”

Stepping back from the specifics, this week’s deal touches on some big themes. One, as PC sales continue to fall relative to other devices, hardware companies like Dell, Hewlett-Packard, and Lenovo are going deeper into servers and networking systems. Two, New England companies and innovators may need to think less about Silicon Valley and more about places like Beijing and Shanghai for talent, capital, customers, and partners. And three, U.S. tech companies have learned a lot about the Chinese market from the experiences of IBM, Microsoft, Google, Intel, and the like.

“The China marketplace is the same, but a little different from everywhere else,” says Hortensius, with a touch of understatement. Being “focused on relationships is important,” he says. EMC’s Mathews adds, “For us, you really can’t underestimate the importance of that locality—having local partners that have critical mass and momentum in the market.”

And that’s the key to this deal, in my mind. EMC now has a big, Chinese-owned partner in its corner to help promote its expansion in the region. What it does to nurture that relationship remains to be seen—but will go a long way toward determining the global future of two of the biggest tech companies around.

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com or call him at 617-252-7323. Follow @gthuang

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