IBM in talks with Lenovo over x86 server business sale

/ 4 years ago

IBM is looking forward to having the Chinese based PC maker Lenovo as it plans to sell off its system x server business for $5 Billion to $6 Billion. IBM is selling away their business division which sells low cost x86 servers usually used by corporate data centers.

Lenovo and Apple are the only computer companies that have been having consistent growth even during the first quarter of 2013 where everyone has been observing dramatic decline in PC Sales. Lenovo currently has overtaken Dell’s #2 spot in PC market share and plans to overtake HP to become the world’s largest PC marker. Lenovo did have the #1 title for a brief moment in Q3 2012, as pointed out by IDC.

Since Lenovo is doing well in Consumer PC business, having a low cost x86 business server unit will help the company to get an advantage to compete with HP and Dell who are well established in that business.
IBM recently as announced disappointing earning during Q1 2013 with a 1% profit decline and because of it they’ve missed the financial forecasts by $1.3 Billion.

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Lenovo did admit that there are negotions going on, but it did avoid mentioning IBM’s name Lenovo recently mentioend it in their clarification announcement to stockholders that,”[Lenovo] is in preliminary negotiations with a third party in connection with a potential acquisition”, adding that “no material terms concerning the Potential Acquisition have been agreed and the Company has not entered into any definitive agreement.”

Source: TechSpot

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3 Responses to “IBM in talks with Lenovo over x86 server business sale”
  1. IBM has become very slow in innovation, I remember in the 2000s and before 2000 during the dot com boom that what IBM produced was hot stuff, and everyone wanted. After 2003 iirc they never pushed further PC innovation, and since then they are busy mainly making servers. Why IBM, I wonder, don’t you put money in R&D?

  2. The low cost server market is worth billions, but the hardware side has seen a massive decline in profits over the last ten years, as more and more hardware vendors have driven down the price, and profit, of low cost, high volume servers, what is worth money, is the maintenance and software sales and support, areas in which IBM excel, it also makes sense for Lenovo to purchase IBM’s server division, as Lenavo is a major force in hardware, not just in branded sales, its factories already pump out servers, so it makes sense to scale the operation up, Lenovo will save money simply by mass purchase, driving down the price of its components, $4-5 Billion seems a lot of money just to save a few dollars on each system, but when your producing millions of systems per year, it soon adds up, it makes good sense for both companies.

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