Lenovo looks to expand its presence in the high-end enterprise storage market with it … [+]
Lenovo has announced its intention to acquire Infinidat, a high-end storage vendor, for an undisclosed sum. Pending regulatory approvals, the deal is expected to close in the second half of 2025. I want to offer my initial thoughts on this acquisition, what it means for Lenovo and what it could mean for enterprise IT organizations.
Infinidat fills a hole in Lenovo’s portfolio
Lenovo has been a strong player in the entry-level storage market for years. One of the ways storage is ranked is by price bracket, and at the low end of the market (under $25,000), Lenovo currently ranks first. The company is dominant enough in that segment, in fact, to make it one of the top storage vendors overall according to some industry rankings. However, margins and profitability are difficult to manage when selling to the entry-level segment.
In contrast, Lenovo has not been competitive at the high end of the storage market. While this is primarily because it lacks a complete portfolio at the top tier (including enterprise software features), it also has to do with other factors, such as market perception and Lenovo’s ongoing relationship with storage giant NetApp for Its DM series. (More on that relationship below.)
The lack of a complete Lenovo offering in this high-end, high-margin business has had a compounding effect. First and foremost is the lack of profitability. While revenue growth may be strong, these good top-line numbers may mask weaker-than-desired profitability. This in turn prevents the company from investing in strengthening its hardware and software portfolio. As a result, Lenovo has turned to OEM partnerships to address the high-end market segment.
Lenovo’s acquisition of Infinidat solves this problem directly, because Infinidat’s enterprise-focused solutions complement the Lenovo ThinkSystem portfolio quite well. In fact, Infinidat’s portfolio should fill Lenovo’s significant high-end storage gap, making the company much more attractive as a storage vendor for enterprise IT organizations.
Who is Infinidat?
Infinidat is an enterprise storage provider that focuses on data-intensive customers such as cloud and managed service providers, financial institutions and healthcare organizations. Any data-heavy company running mission- and business-critical applications requires tools that deliver absolute performance and resiliency. That’s what Infinidat does.
While the company competes with all of the enterprise storage companies, its most prominent competitors include Dell ( EMC ), HPE, IBM, and Hitachi Vantara. These are large enterprise storage companies whose customers spend millions of dollars to purchase and distribute their products.
While Infinidat offers a compelling solution, its main challenge is its standing in the competitive landscape. If I’m the CIO of a large enterprise, I’m investing very carefully, especially in storage that’s critical to those business- and mission-critical workloads. I might be willing to give up some features and price cuts for the sake of the big logo behind a solution. The adage “Nobody got fired for buying IBM” (or an equivalent big-name vendor) still embodies important insight into how enterprise IT leaders think about their mission-critical infrastructure.
Because of this challenge, Infinidat has not reached its full potential. In this context, buying Lenovo makes sense. If executed correctly, the combination of Infinidat’s storage software and Lenovo’s hardware design and manufacturing could deliver a disruptive enterprise storage game, especially in the high-end market. Further, the presence of the Lenovo channel could open doors for Infinidas that the company simply couldn’t open on its own.
What about Lenovo’s NetApp relationship?
Lenovo and NetApp have an established partnership through which Lenovo manufactures and resells NetApp technology to better compete in the enterprise through its DE and DM product lines. Lenovo’s acquisition of Infinidad is likely to affect this relationship over time, especially at the higher end of its DM portfolio, where memory and storage rates are high.
The exact impact is difficult to assess in detail; it will depend on how Lenovo thinks about integrating the Infinidat into its entire storage portfolio. Moreover, the Lenovo-NetApp partnership seems to have found its greatest momentum in China. I can see a scenario where the two companies continue to keep their partnership alive while Lenovo focuses its efforts with the Infinidas in the rest of the world.
Keys to Success
While this purchase makes sense, it is by no means guaranteed to succeed. Anyone who has spent time in the tech space can point to many examples of acquisitions that looked perfect on paper but failed in practice. A few things need to happen for Lenovo to extract maximum value from its Infinidat acquisition.
First, the company needs to determine where to use Infinidat’s storage software across its portfolio. Infinidat is known for its simplicity, flexibility, scale, and performance, largely thanks to the software its development team has created. Understanding how to leverage all that goodness across the storage stack is key to ensuring a differentiated yet connected portfolio.
Equally important to this portfolio rationalization is maintaining the collective trust of the brains that designed and built the Infinidat storage software stack. The capabilities built into Infinidat’s portfolio arise from long experience in designing and servicing solutions in the large enterprise space — experience that is not easily replaced.
Ensuring that the post-merger sales and marketing teams are tightly integrated is also critical to Lenovo’s long-term success. While Lenovo has been successful in the hyperscale and SMB spaces, it hasn’t gained the same traction in the enterprise. Because of this, the Lenovo and Infinidat organizations will need to leverage each other to help with education and overall go-to-market activity that speaks to all market segments through all sales channels, direct and indirect.
Finally, Lenovo needs to make the necessary investments in the channel to bring about success. While this is related to the previous point about market entry activities, it is worth a little more attention. Channel activation for Infinidads differs from channel activation for Lenovo product lines such as ThinkPads or even servers. While working with CDW, SHI and other volume resellers is beneficial, enabling large-scale channel players like WWT and global systems integrators is where Lenovo is likely to find a bigger return on its investment. .
If the Lenovo and Infinidad teams manage this integration correctly, I believe the storage and server portfolio will gain greater acceptance in the large enterprise market segment. Regardless, I’ll be monitoring this over the next few quarters to see how this acquisition plays out.
