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Chinese PC Maker Looks to Buy IBM's PC Business
idril writes "According to The New York Times (free registration required), China's largest PC maker is reportedly in talks to buy IBM's PC business. Lenovo, formerly known as Legend, is the leading PC maker in Asia outside Japan. Lenovo sells primarily low cost PCs; acquiring IBM's business would help them raise their brand recognition and status among more affluent, brand-conscious consumers."
IBM has always produced a quality product and had a pretty good reputation, especially their laptops. I can't imagine they would want to tarnish that image by selling to a low cost budget type PC company.
That's not what's likely to go on here - it's most likely they'll kick out a bunch of advertising that says they bought the division from IBM at the same time they start kicking out IBM-designed PCs. Of course, if the people who make [some] IBM PCs great (I'm mostly thinking of thinkpads here but IBM HAS made some pretty nice PCs now and then) decide they don't want to work for them, which is a highly likely scenario, then the quality will taper off sharply within a generation or two and they'll be back to being known as a manufacturer of crap - as Legend was.
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
Most probably they won't have an IBM logo on it. Loot at the harddrive division they sold a while ago, these disks are clearly Hitachi, so I assume the same would happen here.
Why not? IBM's products are manufactured almost exclusively, with just IBM's name/logo on it. International Business Machines can be taken at face value. Imagine an industrial China turning the world into its commercial empire, the way America did to England.
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make install -not war
I don't think it'll happen though.. they're in too many service contracts and having a hardware division in house makes much more sense than trying to procur another vendor's equipment and supporting it while maintaining their level of service. Think of all the government and business contracts that outsource to IBM who in turn provides the hardware, software, and people to make their business work. IBM would be essentially saying "well, we're going to buy generic white box PCs from China instead of supplying our quality systems from now on." Pooof, they'd lose all their federal government contracts overnight as they find someone that supports HP or Dell.
IBM is a business, and no matter what we may think they owe the PC community, it's still about doing sound business.
IBM has the largest and most profitable Services business in the Tech industry...and anyone who thinks they aren't a LOT more than just a PC manufacturer has no idea who IBM is.
When you get down to it though, Dell has proven that theirs is the only business model that really works in the PC industry as it stands currently. IBM would be faced with the decision of spending billions of dollars to completely change their PC business to try to compete with Dell...or sell that part of their business and concentrate on things at which they excel.
I applaud them for having the courage to move beyond this part of the tech sector and concentrate on things they do better than anyone else does, Services and Proprietary solutions.
Part of IBM is smart...the stupid part of IBM (the mini/mainframe side) is still trying to charge $200k for an AS/400... that is comparable to a $5k HP Linux box."
I know what you're actually saying, but: if you're IBM and you're selling a $5k machine for $200k and can find 700,000 people a year who will buy it, that sounds pretty damn smart to me.
Sailing over the event horizon
A lot of PCs and laptops are already assembled in Taiwan and China. Most of the parts in my PC were made in Asia. How is this a selling out of our technological base?
Specific to this case, selling both the patents that IBM holds for PC manufacturing and selling IBM's legitamacy to an external agency.
And, to put it damn bluntly, all the parts in your PC (and my Mac laptop) made in Asia do sell out our technological base. But booyah, we've saved $100 bucks! What the hell is to stop these firms in Asia from realizing that hey, why make your machines for Dell or Apple when you can get the profit yourselves? Hey, even better, you can call it an IBM?!/p>
We transfer technology paid for by the US government (research, infrastructure) and US consumers (far higher prices, our taxes that pay for research and infrastructure) over to foreign countries - all so the wonderful benefits of "free trade" make everyone richer. Yet free trade means nothing more than cheaper labor and looser environmental standards, never noticing that we're undermining our own way of life.
/* Dang, I can't type that well. */
I just looked on the bottom of my Thinkpad. It sings to me these words: "Manufactured for IBM Corperation; Armonk New York, USA; Made In China". Where was that point you were making? I can't seem to find it.
I found this thread so disturbing I registered an account just to post a response.
It seems that every time a Chinese company is brought up here or anywhere else, the response is the same. All the assumptions being thrown around in these that Legend Computer, and any other Chinese company for that matter, is a crap-peddling puppet of the government that abuses its workers are founded on pure ignorance.
Lenovo, for one, is Asia's biggest PC manufacturer (non-Japan, that is) because it sells products people can actually afford. They've done more to help get the average Chinese citizen computer literate than any other private firm. Their machines are far from "crap." In fact, for the price, their machines are a far better deal than most American brands. (They also have spiffy "idiot" keys that reverts the machine to factory settings, which is pretty darn useful)
This move is just an attempt to break into foreign markets as well. Instead of automatically assuming that the IBM brand is going to crap, I see Legend using the assets from this deal to at least attempt to start producing more high end products. Given the fact that most PC's are manufacturered in places like China anyway (the Compaq I'm typing this on was made in Shanghai), such a move up wouldn't be difficult. One more company competing in the desktop market isn't a bad thing, especially given the threat that Dell sees in Lenovo as a potential rival.
The "ties" with the government amount to nothing more than some exclusive government contracts (just as Kosher as that "buy American" nonsense they have here). The company is also owned (65%) by the Chinese Academy of Sciences, but it began as and has always acted autonomously as a private firm based on western business models (specifically, it's modeled after Dell). Buying IBM isn't Chinese expansionism, it's a company trying to gain a competitive edge.
It's also likely that the biggest shareholders in a company such as Lenovo just happen to also hold government positions, thus making the company technically "state-owned." Another example is that one of the owners of a startup ISP in China was a proffessor at Hangzhou University (family friend) who used his dual position to make business arrangements (SOP over there); the ISP is considered state-owned but certainly doesn't operate that way. The whole question of what is considered state-run and what is private in China is a lot more complex than just who has how many shares in what.
Many of the labour problems associated with Chinese companies are the result of this privatization and lack of regulation and not some arbitrary government oppression like many people seem to think. If anything, the government needs to be more involved (and it's trying) in regulating private enterprise.
That an article dealing with a business decision undertaken by a private Chinese company could spawn comments on the government's human rights problems is disgusting. It's equating the economic progress, the one positive hope for prosperity that the Chinese people could grasp in over a hundred and fifty years, to the shortcomings of the state.
If Legend brand ever comes to the states, I'm buying one.
Rant over. Going back to work.