Stoneware Purchase Boosts Lenovo's PC-plus Strategy

China-based PC manufacturer Lenovo Group has agreed to acquire US-based cloud computing software developer Stoneware for an undisclosed sum. The purchase represents Lenovo ' s initial move into the software sector and comes both in response to the growing software-as-a-service ( SaaS ) capabilities of its principal rivals and as an important step in the company ' s PC-plus growth strategy. BMI views the acquisition as a sound move for a company that requires additional traction in the lucrative educational and government agency marketplaces, areas where Stoneware is already well established.

Although Lenovo is steadily growing its share of the global PC market - and is close to overtaking market leader Hewlett-Packard - the company has to move quickly to match its rivals ' diversification strategies if it wants to maintain that momentum , as its core PC business is increasingly cannibalised by other forms of connected devices, namely smartphones, tablet PCs and smart TVs. The company has already entered the smartphone, tablet and connected TV markets but is reliant on third - party software and solutions to enable its customers to store and access content across a wide range of devices. It has been reselling Stoneware's software for more than two years, but the time has come to take full control of the platform.

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Among other applications, Stoneware ' s cloud computing software powers a classroom-management system that enables teachers to work with and monitor students individually on separate computers and over long distances. Lenovo recently said it was planning to become a more aggressive player in the North American educational and government agency IT markets and the proven capabilities of Stoneware's products fit well with that ambition. Lenovo also entered into an agreement with EMC Corporation in August 2012 regarding the joint development and sale of mass market network storage solutions. This also fits well with the company's PC-plus strategy and with its cloud computing ambitions, though we caution that the company could struggle to differentiate itself from similar offerings of highly visible and trusted brands such as Amazon , Apple and Google .

The transaction is expected to close before the end of 2012, while Lenovo believes it will be another couple of quarters before it will be in a position to begin offering cloud services to its customers. In the meantime, BMI believes the company will be looking to bolster its SaaS ambitions by making further acquisitions, establishing new manufacturing and distribution centres around the world to serve its emerging market expansion ambitions and targeting local manufacturers and brands, as it has in Brazil where, among other things, it recently agreed to acquire PC and smartphone maker CCE .

This article is tagged to:
Sector: Consumer Electronics
Geography: Brazil, North America, Brazil, China, North America, North America

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