2014 Huawei Server Sales Guide - Huawei - Building A … Huawei Server Sales Guide 2 Sales Guidance Issue 1.0 (2014-02-15) Huawei Proprietary and Confidential Copyright © Huawei Technologies

2014 Huawei Server Sales Guide

Issue 1.0

Date 2014-02-15

INTERNAL

HUAWEI TECHNOLOGIES CO., LTD.

Issue 1.0 (2014-02-15) Huawei Proprietary and Confidential

Copyright © Huawei Technologies Co., Ltd.

i

Copyright © Huawei Technologies Co., Ltd. 2014. All rights reserved.

No part of this document may be reproduced or transmitted in any form or by any means without prior written

consent of Huawei Technologies Co., Ltd.

Trademark Notice

, HUAWEI, and are trademarks or registered trademarks of Huawei Technologies Co., Ltd.

Other trademarks, product, service and company names mentioned are the property of their respective owners.

General Disclaimer

The information in this document may contain predictive statements including, without limitation, statements

regarding the future financial and operating results, future product portfolio, new technology, etc. There are a

number of factors that could cause actual results and developments to differ materially from those expressed or

implied in the predictive statements. Therefore, such information is provided for reference purpose only and constitutes neither an offer nor an acceptance. Huawei may change the information at any time without notice.

2014 Huawei Server Sales Guide Contents



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Contents

1 Server Sales Overview ............................................................................................................. 3

1.1 Market Capacity of Servers .................................................................................................................................... 3

1.2 Huawei Presence in the Global Server Market ........................................................................................................ 4

2 Sales Guidance ......................................................................................................................... 6

2.1 Sales Principles ..................................................................................................................................................... 6

2.1.1 Sales Strategies in Key Regions, Customers, and Product Selection ..................................................................... 6

2.1.2 Product and Solution Sales Recommendation Principles ...................................................................................... 7

2.2 Competitiveness Analysis ...................................................................................................................................... 7

2.2.1 Competitive Server Models ................................................................................................................................. 7

2.2.2 Competitiveness Analysis for IBM Servers.......................................................................................................... 8

2.2.3 RFP Specification Guide of Huawei x86 Servers ................................................................................................ 11

2.3 Huawei Server Selling Points ................................................................................................................................13

3 Product Marketability List for Huawei Servers ................................................................. 14

4 V3 Server Launch Plan in 2014 ............................................................................................. 17

5 "Lenovo Acquired IBM x Series Servers" ............................................................................ 19

5.1 Event....................................................................................................................................................................19

5.2 Market Reaction ...................................................................................................................................................21

5.3 Opportunity Analysis ............................................................................................................................................21

5.4 Strategy Suggestion and Guidance ........................................................................................................................21

2014 Huawei Server Sales Guide 1 Server Sales Overview



3

1 Server Sales Overview

1.1 Market Capacity of Servers

According to Gartner figures in 2014 Q1, Chinese x86 server market capacity will reach $5.5

billion in 2014, and the overseas x86 server market capacity will reach $33.9 billion.

Therefore, the global market capacity will total more than $39.4 billion.

The Chinese and overseas x86 server market capacities will be increasing rapidly from 2013

to 2017 and will increase to $7 billion and $43.9 billion respectively. The Chinese and

overseas compound growth rates will be 9.23% and 3.54% respectively.

Figure 1-1 Chinese and global x86 server market capacities




4

1.2 Huawei Presence in the Global Server Market According to Gartner x86 server quarterly shipment statistics, Huawei server shipment had

been steadily increasing in 2013, which ranked third in the first half year and lifted to the

second. The global market share increased from 0.8% in 2012 to 2.8% in 2013, remained in

the fourth.

Figure 1-2 Huawei server shipment ranking No.2 in Chinese market in 2013

Data Source: Gartner Quarterly Statistics: Servers, AP, 4Q13 Update

The analysis result of the Gartner data statistics shows that the x86 server global market is

quietly changing. Huawei server shipment in 2013 ranked fourth in the global market, while

the market shares of HP, IBM, and Dell decline. The following figure shows that the market

shares of Huawei and Cisco have been increasing.




5

Figure 1-3 Huawei server shipment growth in the global market in 2013

Data Source: Gartner Annual Statistics 2013

2014 Huawei Server Sales Guide 2 Sales Guidance



6

2 Sales Guidance

2.1 Sales Principles

2.1.1 Sales Strategies in Key Regions, Customers, and Product Selection

Learn from successful experience and cases of Chinese value industries and focus on

project purchase by government, large enterprises, power industry, energy industry,

finance, and Internet based on the key industry breakthrough in regions in 2013.

Focus on the following countries and industries by region:

− Western Europe: Select the United Kingdom and Netherlands as key countries, and

excavate sales opportunities for the new customers in 2013 in the industries of media

asset, ISP, and government; continue to participate in the centralized server

procurement and shortlist projects for large-scale enterprises, operator server reseller,

and government, striving to achieve scale breakthrough and establishing the brand

and influence in Europe in 2014; implement closer cooperation with channel partners

and empowerment, expand the number and speed of the run-rate, and provide

guidance for distributors in distribution and stockpile.

− The Middle East: Select Saudi Arabia, United Arab Emirates, and Pakistan as key

countries, and achieve scale breakthrough in the centralized procurement projects for the government and energy customers.

− Northeast Europe: Select Poland and Czech Republic as key countries, and continue

to participate in the centralized server procurement and shortlist projects for

large-scale enterprises and government in the Education, government, and healthcare,

striving to achieve scale breakthrough and establishing the brand and influence in

Europe in 2014; activate professional IT channels through promotions and other

methods, and implement closer cooperation with channels and empowerment to form channel run-rate.

− North Latin America: Select Venezuela and Mexico as key countries, and excavate

sales opportunities for the new customers in 2013 in the industries of the government,

energy, and finance to expand sales and achieve scale breakthrough; boost channel sales to gradually implement channel activation and channel run-rate.

− Developing regions such as Central Asia, Southeast Asia, and South Pacific:

Select Turkey, Hong Kong, and Indonesia as key countries, and keep close

cooperation with partners to gradually implement the market breakthrough in the industries of the government, electricity, energy, and media asset.




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Africa and South Pacific (Bangladesh): Grasp opportunities to expand server sales

with the help of data center solutions and large financing projects and accomplish the following three tasks in advance:

− Discover project opportunities (both the frontline and headquarters focus on these project opportunities).

− Involve in architecture designs (Huawei participates in server type selection and

supports based on application scenarios).

− Guide customer requirements (Huawei adds differentiated competitive strengths of Huawei servers and critical items in its tenders) and focuses on server sales splitting.

2.1.2 Product and Solution Sales Recommendation Principles

You are advised to adopt the following product sales principles based on actual customer application scenarios:

− RH1288 V2: applies to offices of small- and medium-sized enterprises or large enterprises' data centers having high-density service requirements.

− RH2288H V2/RH2285H V2: applies to scenarios of small- and medium-sized

enterprise databases, ERP, business intelligence analysis, virtualization, middleware,

and data cache.

− RH5885H V3/RH8100 V3: applies to key services including large databases,

business intelligence analysis, and ERP. It has competitive advantages in price and

technologies for high-end customers and industries and helps raise recognition of

Huawei servers.

− E9000: integrates computing, storage, and network resources and applies to data

center infrastructures integrating physical machines, virtual machines, and computing

and storage networks, business intelligence (BI) and Data Warehouses (DWs),

Hadoop and Hadoop database (Hbase), and high-performance computing (HPC).

The X6000 and ES3000 PCIe SSD are recommended for scenarios of large data centers

and differentiated competition

HPC solutions apply to the large task scenarios requiring concurrent computing in the

education, scientific research, weather, and media asset industries. Recommend solutions and products based on customer requirements.

2.2 Competitiveness Analysis IBM (Lenovo), HP and Dell x86 servers top three in shipment and profit in the world. HP is

the leader in the global server market.

2.2.1 Competitive Server Models

For details about the competitive analysis, see server competitiveness analysis How To Beat

(HTB).

HP IBM Dell CISCO Huawei

Rack

server

DL360e

Gen8

X3530 M4 R420 C22 M3 (Low-end)

DL360p

Gen8

X3550 M4 R620 C220 M3 RH1288 V2




8

HP IBM Dell CISCO Huawei

DL380e

Gen8

X3630 M4 R520 C24 M3 RH2285H V2

DL380p

Gen8

X3650 M4 R720xd C240 M3 RH2288H V2

DL580

G8

X3850 X6 R920 C460 M4 RH5885H V3

DL560

G8

X3750 M4 R820 C420 M3 RH2485 V2

Blade

server

C7000

BL460c

G8,

BL420c

G7,

BL620c

G7,

BL465c

G8

PureFlex

X86:

X220/x222

(Twin node)/x240

Power:

p24L/p260

M1000e

M420 (Twin

node),

M520, M620

UCS 5108

B200

M2/B250

M2/B230

uiM2/B200M3

/B22 M3

E9000

CH121/CH140

(Twin

node)/CH221/CH222

C7000

BL680c

G7

(4-blade)

BL685c

G7(8-bla

de)

BL660c

G8

(8-blade)

PureFlex

X86: x440

Power: p460

M1000e

M820,

M910, M905

UCS 5108

B440

M2/B420 M3

E9000

CH240/CH242/

CH242 V3

High-de

nsity server

SL6000 iDataplex C6000 / X6000

X8000

2.2.2 Competitiveness Analysis for IBM Servers

Table 2-1 Comparison between Huawei rack servers and IBM rack servers

Huawei Server

Form Factor

IBM Server

Feature Advantage of Huawei Server

RH1288 V2 1U 2P x3550 M4 Standard 1U2P server,

occupying small space

and providing limited

hard disk slots and PCIe slots

1. IBM x3550 M4 supports a maximum of

three 3.5-inch hard disks, while Huawei

RH1288 V2 supports more.

2. Huawei RH1288 V2 provides seven

counter-rotating fan modules, while IBM

x3550 M4 provides six fan modules

(IBM provides another 1U2P server




9

Huawei Server

Form Factor

IBM Server


x3530 M4 that uses the E5-2400

platform).

RH2288H V2 2U 2P x3650 M4 Mainstream 2U2P

server, providing high

performance, large

memory capacity

(total 24 DIMMs),

more local hard disks,

and flexible PCIe

expansion

1. IBM x3650 M4 supports fewer than 12

hard disks and provides a maximum

storage capacity of 26 TB, while Huawei

RH2288H V2 provides a maximum

storage capacity of 50 TB.

2. IBM x3650 M4 does not support two

onboard GE ports and provides

low-configuration solutions at high

costs.

3. IBM x3650 M4 does not support 135 W

CPUs operating at an ambient temperature of 5°C–40°C.

RH2285H V2 2U 2P x3630 M4 Balanced 2U2P

server, providing

appropriate

performance and

supporting 12

DIMMs, more local

hard disks, and

flexible PCIe expansion

1. IBM x3630 M4 does not support

2.5-inch hard disks.

2. IBM x3630 M4 provides only four PCIe

slots (excluding the slot for a RAID controller card).

3. IBM x3630 M4 supports the same

operating temperature 5°C–40°C as

Huawei RH2285H V2, but IBM x3630

M4 does not support hot swap for the six fan modules.

RH2485 V2 2U 4P x3750 M4 High-density 4P

server, supporting

more DIMMs (48

DIMMs) and

providing high

bandwidth and high

computing performance

1. IBM x3750 M4 adopts a stacking

structure for CPUs and mezz modules,

which is inconvenient for maintenance and has low reliability.

2. IBM x3750 M4 provides two GE and

two 10GE (optional) onboard ports,

while Huawei RH2485 V2 provides a

maximum of four GE and two 10GE onboard ports.

RH5885H V3 4U 4P x3850 X5 Mainstream 4P server,

providing a platform

of high reliability and

slightly lower

performance than the E5-4600 platform

1. The RH5885H V3 supports four

dual-slot GPUs while the X3850 supports two dual-slot GPUs.

2. The RH5885H V3 provides 16 PCIe

slots while the X3850 provides 11 PCIe slots.

3. Four PCIe cards on the RH5885H V3

support hot swap and maintenance

without opening the chassis cover. The

X3850 supports hot swap of a PCIe card

group that consists of three PCIe cards,

which lacks flexibility.

4. The RH5885H V3 can stably operate at

40°C while the X3850 can operate at




10

Huawei Server

Form Factor

IBM Server


35°C.

Table 2-2 Comparison between Huawei Tecal E9000 and IBM blade servers

Item Platform Huawei E9000

IBM Flex System

Advantage of Huawei Server

Chassis New-gene

ration

blade system

12U 8/16/32

blades

10U 7/14 blades Advantages:

1. Huawei server provides a

backplane switching

bandwidth of 15.6 Tbit/s,

while IBM server

provides 7.168 Tbit/s.

2. Huawei E9000 supports

240 V HV DC power supply.

3. Huawei E9000 provides a

built-in LCD for basic

maintenance configuration.

Disadvantages:

1. Huawei server does not

support 16G FC

switching and provides

no 40GE uplink ports.

Therefore, Huawei server

may be ruled out by IBM.

2. IBM often emphasizes

the redundant backplane of the Flex System.

Compute

node

(x86

only)

Super

high-densi

ty node

CH140/Half-

width

twin-node,

independently pluggable

X222/Half-width

twin-node, not

independently

pluggable,

E5-2400

processor

The CH140 uses the

E5-2600 processors that

provide higher performance

than the E5-2400 processors

used by the X222. E5-2600

processors support independent plug.

Two

E5-2400 processors

None X220/Half-width A low-performance platform.

Persuade the customer to

require a blade that uses two

E5-2600 processors.

Two

E5-2600 processors

CH121/Half-

width

X250/Half-width The CH121 supports

standard PCIe card

expansion and DIMMs at 1.5 times the usual height.




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Item Platform Huawei E9000

IBM Flex System

Advantage of Huawei Server

Four

E5-4600

processors

CH240/Full-

width

X440/Full-width Advantages: The CH240

provides eight local hard

disk slots and supports

DIMMs at 1.5 times the usual height.

Disadvantage: The X440

supports four mezz modules

and four onboard XG ports.

The CH240 supports two

mezz modules and no LOM.

Four

E7-4800/

E7-4800

v2

processors

CH242/

CH242

V3/Full-width

X880/Full-width The X880 is recently

launched, and product documents are not released.

The CH242 is the only E7 4P

server blade that provides the

most hard disk slots and

standard PCIe slots among all E7 4P blades.

Expansi

on node

PCIe

expansion

CH220&CH2

21

/Full-width

PCIe expansion

node/Half-width

(working with

the X220/X240))

The E9000 provides PCIe

expansion nodes that are

directly connected to the

CPUs, which provide a

higher speed than the Flex

System PCIe expansion

nodes provided through a switch.

Storage

expansion

CH222/Full-

width

Storage

expansion node/Half-width

(working with

the X220/X240))

The CH222 provides 15 hard

disk slots that support hot

swap, while the Flex System

storage expansion node provides 12 hard disk slots.

2.2.3 RFP Specification Guide of Huawei x86 Servers

The following table lists typical RFP specifications of each server. For details, see the RFP

specification guide of each server.

x86 Server Recommended Specifications

RH2288H

Support 26 hard disks, which rules out all competitors.

Support integrated 10GE, which rules out all competitive products using the E5-2400 platform.

Operate stably at an ambient temperature of 40ºC for a long time (the indicator serves as a supplement for Huawei).

The RH2288H V2 supports at least seven PCIe slots and

PCIe x16 signals, which rules out all competitive products




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x86 Server Recommended Specifications

V2/RH2285H V2 except Dell R720.

RH2485 V2

Supports highly-efficient Platinum PSUs with at least 94%

power conversion efficiency, which rules out all Chinese competitive products.

Supports integrated 4GE ports, which rules out IBM and Cisco servers.

Operates stably at an ambient temperature of 40ºC for a long

time, while competitive products support 35ºC.

RH5885H V3

Supports DIMMs at 1.5 times the usual height, which rules

out all competitors.

Supports twenty-three 2.5-inch hard disks, which rules out all competitors except Dell.

Supports PCIe card hot swap and maintenance without

opening the chassis cover, which rules out all competitors

except IBM.

Supports a maximum of four dual-slot GPUs, which rules out all competitors except HP.

Supports stable operating at 40°C, which rules out all competitors.

E9000

Uses a passive backplane, while competitive products use

active components on the backplane.

Supports 14 fan modules, which rules out all competitive

products.

Supports GE/10GE/FC/IB ports, which rules out all

competitive products except IBM PureFlex.

Supports 128 I/O ports, which rules out all competitive products.

Supports 135 W E5-2690 2.9 GHz processors, which rules out all competitive products.

Supports DIMMs at 1.5 times the usual height, which

increases competitors' quotation.

X6000

Adopts an innovation structure that supports E3-1200 V2 1P

server nodes, E5-2400 2P server nodes, and E5-2600 2P

server nodes (full-width). No competitive product has been released by now.

The XH621 V2 supports more PCIe slots than a node server,

better than all competitive products.

The XH621 V2 supports eight 2.5-inch hard disks, better than most of competitive products.




13

2.3 Huawei Server Selling Points The following table describes general server selling points and the E9000 selling points. For

details about the selling point data and materials, see the Five Selling Points for Huawei

Servers and Huawei Blade Server Selling Points.

General server selling points

Low failure rate: More than 500,000 servers are delivered and used

on a large scale with the failure rate 15% lower than the average

industrial level.

Excellent performance: Huawei servers have shattered 109 world records for computing performance and energy efficiency.

High security and controllability: Huawei is the only vendor that

supports one-stop R&D, production, and delivery and uses Huawei

proprietary core chips.

High availability: With rich RAS features, Huawei servers can stably operate at a temperature of 40°C for a long term.

Continuous innovation: Huawei has strong R&D capability and uses

Huawei proprietary core chips for accelerating applications and improving service performance.

E9000 selling points

Industry-leading reliability: Huawei E9000 supports continuous

operating at the high temperature of 40°C and a failure rate of 15% lower than competitive products.

Industry-leading computing density: The E9000 chassis supports

thirty-two 2P nodes and 64 Romley EP 130 W CPUs. The

maximum floating point computing performance of each chassis

reaches 16.2TFlops.

Industry-leading storage density: The E9000 CH222 (full-width)

supports fifteen 2.5-inch hard disks, which provide a leading

storage capacity per slot. Each E9000 chassis supports a maximum

of one hundred and twenty 2.5-inch hard disks.

Industry-leading switching capabilities: The E9000 switch

modules use industry-leading Huawei DC switch technologies,

which provide a backplane switching capacity of 15.6 Tbit/s, and

supports the evolution from 10GE to 40GE and 100GE to maximize

the ROI. Each E9000 chassis provides one hundred and

twenty-eight 10GE ports to support flexible network configurations.

Industry-leading energy efficiency: Huawei E9000 ranks first in

multiple comparison tests of China Mobile and China Unicom and

has passed the China Energy Conservation and Environmentally-Friendly Certification.

Convenient O&M: Huawei E9000 supports plug-and-play for

boards and cards and requires no configuration for the new devices,

and supports automatic configuration and transfers for BIOS, NIC, and RAID parameters.

2014 Huawei Server Sales Guide 3 Product Marketability List for Huawei Servers



14

3 Product Marketability List for Huawei Servers

The product marketability list in this chapter is for reference only. Prepare an actual

marketability list for Huawei servers using the quotation tool.

Table 3-1 Product application scenarios

Product Type

Product Model Sales Restriction Application Scenario

Blade server

E9000 – CH121

Half-width 2P

blade/main product

Normal sales

Applies to physical

machines, virtual

machines, and computing

and storage network

integrated architectures, BI

and DWs, Hadoop and

Hbase, and HPC in enterprise data centers.

E9000 – CH221 Full-width 2P

blade/main product

E9000 – CH222 Full-width 2P storage

blade/main product

E9000 – CH240

Full-width 4P

blade/main product E9000 – CH242

E9000 – CH242 V3

E9000 – CH140

Half-width 2P

twin-node blade

Normal sales

Rack server

RH1288 V2 1U 2P rack/main product

Applies to customers

having higher

requirements on density

and storage, and general

workloads scenarios or private scenarios.

RH2285H V2 –

8HDD

2U 2P rack, normal

sales

Applies to multiple fields,

including scenarios of web

services, e-commerce,

collaboration, distributed

databases, ERP

deployment, and virtualization.

RH2285H V2 –

12HDD+2HDD

RH2285H V2 –

26HDD

RH2288H V2 – 8HDD

2U 2P rack/main product




15

Product Type


RH2288H V2 –

12HDD+2HDD

Normal sales

RH2288H V2 –

26HDD

RH2485 V2 – 8HDD 2U 4P rack, normal

sales

Applies to key service

fields and large virtual

consolidation scenarios

including large databases and ERP deployment.

RH5885 V2 – 4P

4U 4P rack/main

product

Normal sales

RH5885 V2 – 8P 8U 8P rack, normal

sales

RH5885H V3 – 4P 4U 4P rack/main product

RH8100 V3 – 8P 8U 8P rack/main

product

X6000 data

center

servers (2U)

X6000 - XH310 V2 1P half-width node,

normal sales

Applies to scenarios of

large datacenters, cloud

computing, Internet

search, portals,

e-commerce, network

games, and network communities.

X6000 - XH311 V2

X6000 - XH320 V2 2P half-width node,

normal sales X6000 - XH321 V2

X6000 – XH621 V2 2P full-width node,

normal sales


large datacenters, cloud computing, virtualization

High-perfor

mance

value-added

components

of servers

ES3000 – 800 GB

SSD cards,

complying with

standard PCIe ports

on rack servers

Applies to high-concurrent

scenarios including search

services, login

authentication services,

download server, network

video services, cache, and network acceleration.

ES3000 – 1.2 TB

ES3000 – 2.4 TB

Application

server

Exchange email

application server

Email application

server, normal sales

Applies to one-stop mail

solutions, including load balancing and firewall.

N2000 low-end NAS

application server

NAS low-end

storage, normal sales


NAS unified storage and

data management

simplification to improve

operation efficiency of

enterprises and their branches.




16

Product Type


Solutions

HPC solution Normal sales

Education and scientific

research institutions, such

as CAE simulation,

physical chemistry, and

life sciences; petroleum

industries, such as oil

exploration; meteorology

and seismology agencies;

media asset industries,

such as animation rendering

RISC To IA Restricted sales

If the customer uses a live

network that adopts the

IBM Power system, HP

Superdome system, or

Oracle SUN system,

Huawei provides solutions

for migrating midrange

computers to the x86 platform.

Main product: Products are recommended to customers in communication with customers or project

guidance. These products have competitive advantage.

Normal sales: Products with normal sales have no regional sales restrictions. These products can be sold and delivered in batches.

Restricted sales: Products or solutions with restricted sales may involve consultation or customization. Communicate and discuss with the marketing personnel separately for specific projects to determine detailed sales strategies.

2014 Huawei Server Sales Guide 4 V3 Server Launch Plan in 2014



17

4 V3 Server Launch Plan in 2014

Product Type

Product Model Release Date Application Scenario

Blade server

E9000 – CH121V3 Half-width 2P blade

2014-10-14 Applies to physical

machines, virtual

machines, and computing

and storage network

integrated architectures, BI

and DWs, Hadoop and

Hbase, and HPC in enterprise data centers.

E9000 – CH220V3 Full-width 2P blade

2014-10-14


2014-10-14


2014-03-14

Rack server

RH1288 V3 1U 2P rack server

2014-10-14

Applies to customers

having higher

requirements on density

and storage, and general

workloads scenarios or private scenarios.


2014-10-14

Applies to multiple fields,

including scenarios of web

services, e-commerce,

collaboration, distributed

databases, ERP

deployment, and virtualization.


2014-10-14

RH5885H V3 – 4P 4U 4P rack server

2014-03-14

RH5885 V3 – 4P 4U 4P rack server

2014-03-14

RH8100 V3 – 8P 8U 8P rack server

2014-09-14

High-perfor

mance ES3000 V2 SSD cards,

complying with

Applies to high-concurrent

scenarios including search

2014 Huawei Server Sales Guide 4 V3 Server Launch Plan in 2014



18

Product Type

Product Model Release Date Application Scenario

value-added

components of servers

standard PCIe ports

on rack servers

2014-08-30

services, login

authentication services,

download server, network

video services, cache, and

network acceleration.

2014 Huawei Server Sales Guide 5 "Lenovo Acquired IBM x Series Servers"



19

5 "Lenovo Acquired IBM x Series Servers"

5.1 Event

At the afternoon of 23 January 2014, Lenovo announced that:

Lenovo acquired IBM's x86 server business for about $2.3 billion. The computer maker will

take control of IBM's system network products such as System x products, BladeCenter,

blades, Flex System, Pure Flex, and blade network technology, and some IPR.

The purchase is for $2.3 billion, of which $2.07 billion will be paid in cash and the rest in 182

million shares of Lenovo stocks issued to IBM.

7500 IBM employees will join in Lenovo. After the completion of the deal, Lenovo will be

responsible for the relevant customer service and maintenance service, and IBM will provide

maintenance service for customers on behalf of Lenovo for a period of time in the future.

$2.07 billion in cash 182 million shares of Lenovo stock

IBM stock price fell by 0.2% after the acquisition

was disclosed.

The acquisition including:

IBM's System x products, BladeCenter, Flex System blade servers and switches, x86 Flex

integrated system, NeXtScale and iDataPlex servers, and related software

IBM kept high-valued server business

System z large hosts, PowerSystems servers, Storage Systems, Power Flex server,

PureApplication, and PureData applications

Lenovo acquired IBM's x86 server assets for about $2.3 billion




20

IBM claimed that:

IBM would continue to develop and improve Windows- and Linux-based

software product combination designed for the x86 platform.

7500 IBM employees will be transferred to Lenovo.

In Chinese market, the x86 server market share in the first three quarters in

2013 are as follows (by shipment):

Lenovo will take 15.81%

Estimation based on the same-phase

global market: HP 32.05%

DELL 27.28%

Lenovo 14%

IBM market share of the x86 servers in the global and Chinese markets fell

12.7% and 19% respectively.

After the acquisition, Lenovo has at least 14% share of the x86 server in the global market.

It is estimated that the acquried x86 servers will generate$300–500 million profit, so that Lenovo will earn back the cost in

six to seven years.

However, the revenue of IBM x86 server business is estimated as $4.6 billion in 2013, and the loss in the past 12 month

by 2013-12-31 is $26.4 million.




21

5.2 Market Reaction For IBM, its x86 server business has declined. The IBM hardware business achieved a

total revenue of $4.3 billion in 2013 Q4, which is down 26% year on year, of which the

revenue of the System x midrange computers using the x86 technology fell 16%.

The news came one year ago that IBM planned to sell the x series business was disclosed

one year ago. During that period, IBM general sales agents and distributors have

stopped stocking IBM x series products, and the core channels have been waiting and

seeing.

Especially, IBM x series products are purchased by Lenovo who has been focusing on

consumer products such as PCs and terminals but are indifferent towards the enterprise market. Therefore, the original IBM channels have more misgivings about

the x series product trend, potential channel conflicts, and customer recognition.

5.3 Opportunity Analysis IBM sold only the x series hardware products that have low technical content and have

been at a loss and kept the high-valued business-critical servers and expert system.

From the perspective of the product competitiveness, this event does not pose any thread

to Huawei.

Lenovo has about 100 people for server research and development, which provides weak

R&D capability. Prospects are dimmed. The motive of Lenovo to purchase x series

products from IBM is to expand market shares. However, Lenovo may fail to ensure the

continuity of the x series product roadmap after paying the $2.1 billion in cash. The

continuous innovation for the x series is worrying.

The current overseas business market revenue of Lenovo servers accounts for less than 5%

of its total revenue. Lenovo has a strong channel system in China, which will be in fierce

clashes with IBM channel partners. For the overseas market, IBM channel faces the

challenges of replacing the brand. During the future six months to one year when the

IBM server brand disappears, original IBM customers and partners may not recognize the new vendor. This is Huawei's opportunity to get these customers.

Seize the opportunity to find out the IBM existing general agents and ISVs for the

overseas market and partner them. This will greatly enhance the breadth and depth of Huawei overseas market.

After the acquisition of IBM x series products, Lenovo may dismiss most of the 7500

employees transferred from IBM to reduce HR costs. This is Huawei's great

opportunity to expand the overseas frontline professional team.

5.4 Strategy Suggestion and Guidance The following key actions are only the basic guidance for frontline engineers to expand IBM

channels. The detailed expansion strategies and channel policies should be prepared based on

actual regional market conditions.

Determine the target channels: Review IBM channel situations in a region, including the

number of IBM channels, distribution, level (gold/silver), sales volume/mode, and customer industry. Select several IBM channels and visit and screen them one by one.

Initial visit: Introduce Huawei server products and advantages to the channels, establish

basic contact and communication to better understand channels' views on Lenovo's




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acquisition of IBM x86 products, and gradually transfer the acquisition influence on their

interests.

Interim visit: Use several ways to further strengthen the relationship with the channels,

showing Huawei's willingness to cooperate, such as promote regional high-level visits,

invite channels to come to Huawei HQ in China to understand Huawei's server R&D

capability, and allow purchase orders placed by channels to show cooperation sincerity.

Late visit: Gradually conduct in-depth cooperation, including project pipeline sharing,

joint marketing activities, and market promotion at V2 and V3 switching, to make these channels become the general agents, VARs, and VAPs certified by Huawei.

HQ will fully support the frontline to expand the original IBM channels.

Personnel support: send personnel on a business trip to assist the frontline to review and

visit IBM channels.

Marketing support: provide analysis on IBM products and Lenovo products.

Business support: give business support and preference to the cooperation projects with IBM channels, related marketing activities, and product promotions.

Documents

2014 Huawei Server Sales Guide - Huawei - Building A … Huawei Server Sales Guide 2 Sales Guidance Issue 1.0 (2014-02-15) Huawei Proprietary and Confidential Copyright © Huawei Technologies