Analysis: Lenovo to acquire Infinidat

Infinidat Ltd has announced it is to be acquired by Lenovo, a global Chinese-American infrastructure vendor. As part of the deal, Infinidat will remain an independent entity. How will this affect the direction of both companies, with a potentially wider and deeper storage and server portfolio on offer?

Background

Infinidat, an independent vendor of enterprise storage solutions, has announced it is to be acquired by Lenovo Group Limited, a global hardware infrastructure vendor. In a brief press release, the two companies highlighted the synergy of bringing Infinidat’s enterprise portfolio to the midrange capabilities of Lenovo. From a brief discussion with Infinidat, it appears the company will continue to operate independently with few (if any) changes in the short term.

Lenovo

Lenovo Group Limited (generally known as Lenovo) was founded in China in 1984, selling business and consumer technology. The company is probably most well-known for its laptop and PC business, which it acquired from IBM in 2005. In 2014, Lenovo acquired IBM’s x86 server business (the System x and Blade Center products). In the storage market, Lenovo resells NetApp ONTAP and E-Series appliances under an OEM deal established in 2018. These are branded as the DM-Series and DE-Series, respectively. The company also offers smaller DG-Series all-flash appliances which also use ONTAP.

All the Lenovo storage solutions run on Lenovo hardware, which is a good insight into where the combined Infinidat and Lenovo partnership may head. More on that in a moment.

Infinidat

Infinidat Ltd was founded in 2011 by Moshe Yanai, a storage industry guru who was responsible for the development of the current evolution of the shared storage market. The original Symmetrix line of storage arrays designed and built by Yanai for EMC in the late 1980s took low-cost hard disk drives, compute, and system memory to build a resilient storage solution, initially using data mirroring and eventually RAID-5/6 protection.

Symmetrix was unique in that it created an entirely new storage architecture. Yanai repeated the feat with the development of XIV and the NEXTRA product line, sold to IBM in 2008. In 2011, he founded Infinidat and created another unique architecture using a feature known as the Neural Cache.

You can read more on Infinidat in our X-Ray eBook and this blog post from 2022.

X-Ray: Infinidat Ltd.

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Enterprise

Infinidat initially targeted the enterprise storage market, competing with Yanai’s previous EMC (now part of Dell), Hitachi and IBM. In 2020, Yanai left Infinidat, with ex-Western Digital VP Phil Bullinger appointed as CEO in January 2021. As an enterprise vendor, Infinidat initially offered systems similar to the “full-rack” configurations of the 2000s. However, in recent years, the company has extended its portfolio to include an all-flash solution called the SSA and a new G4 architecture based on AMD processors, including a 14 rack-unit offering.

The key value of the Infinidat architecture remains the software operating system, branded as InfuzeOS, which runs on industry-standard hardware and is sold as the InfiniBox platform. InfiniBox is also offered as a data protection appliance branded as InfiniGuard.

Synergy

If we look at the existing Lenovo storage line-up and the architecture of InfiniBox, we see a clear parallel in design. Both use industry-standard or commodity hardware, with all the intellectual property delivered by the respective storage operating systems (ONTAP and InfuzeOS). Initially, we can see obvious synergy in delivering Infinidat solutions using Lenovo hardware. This, though, is just a packaging and hardware sourcing arrangement; there is a lot more to unpack in this deal.

First, Infinidat allows Lenovo to offer solutions to enterprise customers that need large-scale and cost-efficient technology. Although the existing DM, DE and DG solutions are certainly capable products, none offers a direct competitive replacement for Dell PowerMax or IBM DS8000 systems.

Second, Lenovo must currently pay some fees for the licensing agreements with NetApp for the use of ONTAP, which directly impacts the profit margin for the current storage solutions. Owning Infinidat gives access to InfuzeOS and an increased margin opportunity compared to the existing product families.

For Infinidat, the company gains access to a much wider market of customers, with the opportunity to co-sell with the Lenovo range of server products.

Evolution

Naturally, the big question we need to ask is what the long-term evolution of the combined Lenovo and Infinidat business will be. We’ve already seen that Infinidat has widened its product suite and increased its TAM by introducing smaller-scale products. How far could this scaling go?

When HP acquired 3PAR in 2010, one of the first strategic moves from Storage GM David Scott (the 3PAR CEO) was to extend the architecture to small and large configurations, with a single storage operating system supported across all the solutions. Could Infinidat do the same?

From our understanding of the InfuzeOS architecture, there is no reason why Infinidat couldn’t introduce a midrange series of products with two rather than three controllers, targeting the market that the current DM, DE and DG products occupy. Lenovo has the server design capabilities; Infinidat has the software skills to make this work. Of course, this would potentially mean an unravelling of the existing NetApp relationship but would provide Lenovo with intellectual property rights over the entire storage stack. Having said that, the ONTAP-powered solutions offer a different market opportunity, so both could co-exist if required.

The Architect’s View®

Naturally, our thoughts are mere speculation, but acquisitions always happen for some strategic reason that seeks to take advantage of an opportunity to build and sell a more competitive product.

The possibility is there to bring together the hardware capabilities of Lenovo with the storage software IP of Infinidat, creating a broader set of storage solutions for enterprise customers. If that evolution comes to pass, we would caution that there is one area to keep under scrutiny.

Currently, the Lenovo website is very hardware focused. The existing storage solutions highlight traditional “speeds and feeds” rather than customer outcomes, whereas Infinidat is much more focused on the value to the customer. We are interested to see how the two cultures can be brought together to deliver value to both brands.

Overall, this is a positive move for both companies and one we will be watching with interest.

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