IBM Sells x86 Server Market to Lenovo

Subject: General Tech, Systems | January 25, 2014 - 07:42 PM |
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.

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... 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.

Source: Ars Technica

January 25, 2014 | 08:47 PM - Posted by Anonymous (not verified)

IBM 86es x86 based servers, hear that Intel, Ah Ha Ha Haaaa!
IBM has got its own CPU non x86 powered systems! And don't forget the hoards of ARM chips on the way!

x86 has never been part of IBM's high end as IBM has always had Power based CPUs for their real high end big Iron server IP, so "in the high-end server and mainframe market, too" is not so true, maybe in the so called x86 high-end, but never IBM's high-end! x86 has always been a low margin deal in IBMs world, here Lenovo, take these crumbs off Our Big Blue hands, $2.3 billion, enjoy your meager profits.

January 26, 2014 | 09:04 AM - Posted by praack

it always saddens me when another company sells it's business completely off shore.

i realize that for IBM it is probably the "thing" to do to allow it to concentrate on it's "core" business. but even there- they offshore most work nowadays - so a lot of US programmers are out of work.

Can i back that up? in part- i have some working for my department- we are business- don't code- yet they were IBM programming and testing.

i imagine in a couple of years it will be the same for the 7500 as their jobs move to mainland China

January 26, 2014 | 12:26 PM - Posted by Anonymous (not verified)

If they are IBM programmers, those that are in the states, they are most likely high level programmers, and are now/will be coding for IBM's Power processor family of systems, or have the chance, depending on their skill set, to work for other IBM departments, IBM is a world wide company, and who knows how many of the x86 staff where in the US to begin with, x86 was never an IBM core business, and IBM's power based processors can run circles around x86 in the server room. Obviously, these employees knew that IBM was trying to negotiate the sale of its x86 server business, and IBM probably offered retraining to a few, and if these programmers had any thing to do with linux on x86, they are now donig linux on IBM's power based systems, IBM is probably looking for linux core system programmers! Those in the US, with IBM on their resume are/will be actively headhunted. It will be a while before the deal closes and any US employees have had/will have time to look for other work inside and outside of IBM. Others may choose to go to China, a very hot market to get your foot in the door, as the whole reagon still has rapidly growing markets.

Note: main article appears to have been updated sometime between the orginal posts, so some direct quotes may no loger be there, never the less the quoted information was current at the time of the post. (???)