Storage giant EMC unites with PC OEM Lenovo on new joint venture

Ashes of Iomega transformed into SMB-focused “LenovoEMC Ltd.”

Lee Hutchinson – Jan 3, 2013 2:00 pm | 10

Lenovo and EMC announced in a press release Thursday that they finalized the formation of their joint venture, called “LenovoEMC Ltd.” The new outlet will specialize in selling network attached storage (NAS) products to small and medium businesses, as well as remote offices of enterprises. The partnership, first announced in August 2012, takes EMC’s Iomega line of SMB-focused NAS products and couples them with Lenovo’s global reach and scale. Lenovo’s presence in emerging markets is key to the deal.

EMC is no small company itself—the Hopkington, MA-based enterprise storage company’s products are in many Fortune 500 data centers. It acquired Iomega in 2008 and kept the Iomega brand, using it for consumer- and small-to-medium business-focused storage gear. With the formation of the LenovoEMC joint venture, Iomega will no longer exist as a business unit; it will be fully subsumed into the new entity instead.

At first glance, the marriage looks a bit odd—a big PC OEM and a storage vendor’s SOHO/SMB unit joining up? But the press releases surrounding the spin-off also note the LenovoEMC joint venture isn’t limited to selling SMB NAS boxes—the new company will also include an x86 server “development program,” along with an agreement to let Lenovo OEM EMC’s larger storage products. EMC previously maintained a strong OEM relationship with Dell, before it was famously and publicly terminated following Dell’s acquisition of Compellent (an EMC competitor) and its aggressive moves into the enterprise storage market.

The world of enterprise storage is notoriously high-margin, and this OEM relationship gives Lenovo a piece of that pie. But what then does EMC gain? The answer requires looking beyond the USA’s borders to China and other emerging markets, where Lenovo has a significant presence. There’s tremendous money to be made selling technology in emerging markets; in the enterprise storage space, EMC has already modified several of its own offerings for the region (such as a smaller, cheaper version of its flagship VMAX array called the VMAXe), but there are only so many enterprise players to sell to. Smaller businesses in emerging markets are a huge source of revenue to be tapped, and it seems obvious that EMC and Lenovo hope ultimately to use this new joint venture to sell consumer and SMB-grade storage and x86 servers to that class of customer.

The new LenovoEMC entity will make what it’s calling its “press debut” at CES. Ars will be on hand to check them out.