Lenovo has announced its intent 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 bands, and at the low end of the market (under $25,000), Lenovo currently ranks number one. The company is dominant enough in that segment, in fact, to make it a top-five storage vendor overall according to some industry rankings. However, margins and profitability are hard to manage when selling into the entry-level segment.
By contrast, Lenovo has not been competitive in the high end of the storage market. While this is mainly because it lacks a full portfolio at the high end (including enterprise software features), this is also tied to 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 full-fledged Lenovo offering in this high-end, high-margin business has had a compound effect. First and foremost is the lack of profitability. While revenue growth may be strong, those good top-line numbers can mask weaker-than-wanted bottom-line profitability. That in turn prevents the company from investing in strengthening its own portfolio of hardware and software. 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 large-enterprise-focused solutions complement the Lenovo ThinkSystem portfolio quite nicely. In fact, Infinidat’s portfolio should fill Lenovo’s sizeable high-end storage gap, making the company far more attractive as a storage vendor for enterprise IT organizations.
Who Is Infinidat?
Infinidat is an enterprise storage provider that focuses on customers with a lot of data, such as cloud and managed service providers, financial institutions and healthcare organizations. Any company with a lot of data that drives mission- and business-critical applications requires tools that deliver both performance and absolute resilience. That’s what Infinidat makes.
While the company competes with all enterprise storage companies, its most prominent competitors include Dell (EMC), HPE, IBM and Hitachi Vantara. These are big enterprise storage companies whose customers spend millions of dollars to acquire and deploy their products.
While Infinidat offers a compelling solution, its primary 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 is foundational to those business- and mission-critical workloads. I may be willing to forego some features and price breaks for the sake of the big logo standing behind a solution. The adage “Nobody ever got fired for buying IBM” (or an equivalent big-name vendor) still embodies an important insight into how enterprise IT leaders think about their mission-critical infrastructure.
Because of this challenge, Infinidat has not achieved its full potential. In that context, the Lenovo acquisition makes sense. If executed correctly, the combination of Infinidat’s storage software and Lenovo’s hardware design and manufacturing can deliver a disruptive enterprise storage play, especially in the high end of the market. Further, the Lenovo channel presence can open doors for Infinidat 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 OEMs and resells NetApp technology to better compete in the enterprise through its DE and DM product lines. Lenovo’s acquisition of Infinidat will likely impact this relationship over time, especially at the higher end of its DM portfolio, where memory and storage scales are high.
The exact impact is hard to assess in detail; it will depend on how Lenovo thinks about integrating Infinidat across its entire storage portfolio. Additionally, 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 Infinidat on the rest of the world.
Keys To Success
While this acquisition makes sense, it is by no means guaranteed to succeed. Anyone who has spent time in the technology space can point to many examples of acquisitions that looked perfect on paper but failed in practice. A few things have to happen for Lenovo to extract maximum value from its Infinidat acquisition.
First, the company needs to determine where to leverage Infinidat’s storage software across its portfolio. Infinidat is known for simplicity, resilience, scale and performance, largely thanks to the software its development team has created. Understanding how to leverage all of that goodness across the entire storage stack is critical to ensuring a differentiated but connected portfolio.
Equally important to this portfolio rationalization is retaining the collective brain trust that designed and built the Infinidat storage software stack. The capabilities built into the Infinidat portfolio arise out of long experience designing and servicing solutions in the large enterprise space — experience that isn’t 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 hyperscaler and SMB spaces, it has not gotten the same traction in the enterprise. Because of this, the Lenovo and Infinidat organizations will have to leverage one another to help with the education and overall go-to-market activity that speaks to all market segments through all sales channels, direct and indirect.
Finally, Lenovo must make the necessary channel investments to drive success. While this is tied to the preceding point about go-to-market activities, it is worth a little more attention. Channel activation for Infinidat differs from channel activation for Lenovo product lines such as ThinkPad or even servers. While working with CDW, SHI and other volume resellers is beneficial, activating large-scale channel players such as WWT and global systems integrators is where Lenovo will likely find a bigger return on its investments.
If the Lenovo and Infinidat teams manage this integration correctly, I believe that both the storage and server portfolios will gain greater adoption in the large enterprise market segment. Regardless, I’ll monitor this over the coming quarters to see how this acquisition plays out.
