IBM has announced that the company has reached a licensing agreement with PC vendor Lenovo regarding the company's server technology. According to the companies' statements, Lenovo is planning to build single-CPU and dual CPU servers based on IBM's System X server technology.

The agreement stipulates that Lenovo will manufacture and sell Lenovo-branded servers based on the IBM technology on the small and mid-size business market, while IBM will continue to produce and sell the same servers, but stamped with its own brand.

According to Rich Hume, general manager for modular systems in IBM's Systems & Technology Group, the agreement also covers the basic technology used for building a server, such as rack mount and pedestal servers, but not blade servers.

As an addition to the contract, IBM states that it will support Lenovo's server sales with financing and maintenance, as well as other server-related services. Hume made it very clear that this licensing does not imply or suggest the fact that IBM is exiting the server business.

On the contrary, the agreement is a method of extending the System X server technology to a wider range of customers, including the small- and mid-range businesses.

"IBM's share in the smaller business server market is in the mid-high single digits," he said. "Lenovo has a great reach with its partner net. This deal incents Lenovo to participate in the under-500-person company market, and the midrange market."

According to Hume, this partnership is aimed at spreading the IBM technology and hardware into the so-called "white space" of the market, where the IBM products have not breached in. "We chose to partner with Lenovo since they bought our PC business," he said. "We will go in the same direction with the x86 server business. The intent is to engage in a part of the business where we currently don't participate."