Software and Manufacturing & Technology and Technology

Chinese PC giant to buy Carmel software firm Stoneware

September 18, 2012

The giant Chinese personal computer maker Lenovo Group said it's buying Carmel-based software developer Stoneware Inc. as it seeks to gain a foothold in the rapidly growing field of cloud computing.

Lenovo did not say how much it was paying for Stoneware, which has 67 employees spread between Indiana and Salt Lake City. The companies said all Stoneware employees would join Lenovo and there would be no job cuts.

Lenovo said Tuesday it was buying Stoneware to "enhance and expand" its cloud computing business. The term refers to storing documents and software applications at remote data centers and allowing users to access them through smartphones, tablet computers, laptops and other Internet-connected devices.

"Stoneware has built a strong, profitable, and growing business by delivering innovative software technologies, which are helping people and organizations make the complex environment of cloud computing that much simple," Lenovo said in a press release.

Lenovo said 12-year-old Stoneware already has profitable and highly innovative products serving primarily the education and public sector markets. The Chinese company plans to use its global reach as the world's second-largest PC maker and No. 1 commercial laptop maker to expand Stoneware's products into the vast consumer market.

Stoneware produces software used mainly by governments and schools to synchronize data across multiple mobile devices, Mark Cohen, a Lenovo vice president, said.

The purchase is expected to close by the end of 2012.

The acquisition is Lenovo’s second in less than three weeks as CEO Yang Yuanqing expands the company to take on rivals including Apple Inc. and Samsung Electronics Co. in smartphones, tablets and Internet-ready televisions. Lenovo will use Stoneware to build a “public cloud” for consumers, Cohen said. The service would compete with Apple’s iCloud, which lets users store music, movies and applications and access them by the Internet and wirelessly.

The deal “helps us access and interface with users in a way that we haven’t been able to do,” Cohen said. “We are not trying to remake ourselves into a software company. What we’re trying to do is selectively enter the software market where we can make a difference for our customers, and to support our overall strategy.”

Lenovo, whose headquarters are in Beijing and Morrisville, N.C., has focused previous acquisitions on hardware. It bought the PC division of International Business Machines Corp. in 2005. Last year, the company acquired control of Medion AG, an Essen, Germany-based computer maker, and the PC unit of Tokyo-based NEC Corp.

On Sept. 5, Lenovo announced plans to buy the Sao Paulo, Brazil-based consumer-electronics group known as CCE for about $147 million.

Lenovo has been in a partnership to re-sell Stoneware’s software for the past two years, during which time the company’s revenue doubled, Stoneware CEO Rick German said, without supplying more specific details.

German said the deal may lead to further growth for the local operations, but he said there were no specific goals in mind.

Lenovo will expand Stoneware’s cloud-computing offerings to consumers in “the next couple quarters,” Cohen said.

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