Lenovo announces strategy to boost profit

"Teaming up with Lenovo will help us better access the Chinese market because it has a well-established sales and service network in the country," said Marcus Stoi, president of EMC China.

The US company has "several thousand" distribution channel partners in China, while Lenovo has more than 20,000 partners.

Most of the servers released were mid- and low-end entry-level products. The companies pledged to invent more higher-end servers as the research and development ties strengthen.

In addition, the joint venture will face challenges from local competitors, including ZTE Corp and Huawei Technologies Ltd. Both are rolling out similar products that target mid-end clients.

"ZTE and Huawei have advantages in the telecom sector. Currently, we will focus on making hardware rather than integrating services," said Chen, adding that Lenovo will have an edge when exploring overseas markets.

Lenovo is not a newcomer in the server sector. The company released its first server in 1995, but later partnerships with technology providers such as Oracle Corp failed to boost Lenovo's enterprise business.

The company joined hands with EMC after the US company ended a decade-long reseller relationship with Dell, the world's largest PC manufacturer.

Stock in Lenovo, listed in Hong Kong, closed at HK$7.52 (97 US cents) on Tuesday, a drop of 2.46 percent compared with the previous trading day.

gaoyuan@chinadaily.com.cn