IBM Sells x86 Server Market to Lenovo
Subject: General Tech, Systems | January 25, 2014 - 07:42 PM | Scott Michaud
Tagged: Lenovo, IBM, x86, servers
Lenovo will take (or purchase) the x86 torch away from IBM in the high-end server and mainframe market, too. The deal is worth $2.3 billion of which $2 billion will be cash, the remains will be paid to IBM in stock. IBM walked away from talks with Lenovo last year in a deal that was believed to be similar to this one.
Lenovo, famously, took over IBM's PC business in 2005.
... which is increasingly not IBM.
x86-based servers have been profitable, even for IBM. This is yet another example of a large company with a desire to increase their margins at the expense of overall profits. This is similar to the situation with HP when they considered getting out of consumer devices. Laptops and desktops were still profitable but not as much as, say, an ink cartridge. Sometimes leaving money on the table tells a better story and that is okay. Someone will take it.
Lenovo will also become an authorized reseller of IBM cloud computing and storage solutions (plus some of their software). IBM will continue to operate their server and mainframe businesses based on their own architectures (such as Power and Z/Architecture).
Approximately 7,500 of IBM's current employees will be hired by Lenovo as a part of this agreement. Unfortunately, I do not know how many current employees are affected. 7,500 could be the vast majority of that workforce or only a small fraction of it. Hopefully this deal will not mean too many layoffs, if any at all.