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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."
Won't take for the word to get out that they've been eaten by a Chinese megacorp. And if they focus more on 'name recognition' than the quality of their computers, it will take even less time to turn this effort of theirs to prove useless.
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.
http://www.nytimes.com/2004/12/04/business/worldbu siness/04asia.html?ex=1259816400&en=306e8426c19779 57&ei=5090&partner=rssuserland
I am such a karma whore. O'wait, I dont even have a slashdot account. O'well.
Enjoy.
This is going to be interesting. It wasn't long ago that all PCs were 'IBM Compatible'. Thus the brand name IBM has tremendous value. However, once IBM jettisons the PC unit, and a new company takes over it, they will surely want to hang on to the Brand name.
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PC's will be like the toys at the dollar store some day. you look on the back and it says "Made in China" and it cost only a few bucks.
Mark
While another firm may buy the PC business off IBM, unless the deal is pretty amazing, then they won't be able to sell them as "IBM", whuch is what some customers are looking for (not quite the "nobody ever got fired for buying IBM", but more a recognition that they still tended to be higher build quality than the no-name brands, and hence were worth the extra expense).
However, they will presumably acquire the IBM build quality, so the trick is to be able to market the "we use the bits from the people who brought you the PC", and hope that customers adopt them.
"She's furniture with a pulse"
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.'"
Part of IBM is smart; they're getting out of the hardware business and morphing into a service provider, where they can make big $$$. The stupid part of IBM (the mini/mainframe side) is still trying to charge $200k for an AS/400 --- sorry, "iServer" --- that is comparable to a $5k HP Linux box.
I guess if you're stuck with your Cobol program (Do you even have the source? No?), then you can take it like a man.
Yeah, right.
If America and American workers were any good at it the business would have stayed put without any problems. Clearly the companies which are outsourcing and selling their business units to other countries do not feel that America and American workers are good value for money.
Thinkpads are known for cool security devices but I think the chineese could takes this to a whole new level.
Let's face it: The Chineese have a huge lead in fingercuff technology. American fingercuffs aren't even close! If they leverage their cuff experience in the nextgen Thinkpad they might just have the 'next big thing' on their hands.
I heard EA has already pre-ordered!
I can't imagine IBM allowing a foreign manufacturer to sell products with IBM's name/logo on it. Seems awfully risky to their rep.
I don't know that IBM selling out entirely is a foregone conclusion. There's an article by the Register that speculates what's being negotiated is more likely a joint venture than a buyout. Which makes sense. IBM would still be able to maintain control of the branding in that case.
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.
A side issue is the sale of sensitive technology to Lenovo, which may have connections to the Chinese military.
In my opinion, IBM should sell its operations to a European company or a Japanese company. For the latter, I suggest Toshiba. It currently sells laptops that use a finger mouse just like the one in IBM's current notebooks. For the former, I suggest some Eastern European company. Eastern Europe could use the work. Also, Poland currently has many personal computer manufacturers.
IBM may receive a small-ish price from an Eastern European company, but there are larger issues here. IBM management should ponder its corporate social responsibility (CSR) and help to expand Western culture. Unlike the Chinese, the Eastern Europeans are certainly committed to Western values.
IBM getting out of the PC business is a sad day for all of us. They commoditized the PC and made it possible for all of us to have cheap gaming and porn platforms right in our living rooms and bedrooms. Not to mention they built some pretty good computers. I still love my ThinkPad despite its occasional ACPI-related problems. I don't think "Lenovo" is going to be quite the same...
How am I supposed to fit a pithy, relevant quote into 120 characters?
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.
--
make install -not war
Do they actually make them anywhere else? Last time I looked at my Dell, it had China stickers all over it. This would really be a good deal for Gateway though.
The less affluent asian countries are great at stamping out billions of plastic hello kitties, I'm sure IBM is only doing it because they/it can 'make more money' at the end of the day/decade.
:-)
Lift the cover on any old chunk of IBM hardware, you'll probably find much of it was manufactured somewhere other than America. (The rest of the world does exist by the way
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.
Not that I necessarily aree with the grand parent post. I believe he was saying that getting out of hardware in general is a smart move. I believe the following statement:
Part of IBM is smart; they're getting out of the hardware business and morphing into a service provider, where they can make big $$$. The stupid part of IBM (the mini/mainframe side) is still trying to charge $200k for an AS/400 --- sorry, "iServer" --- that is comparable to a $5k HP Linux box.
means that part of ibm is smart (the part getting out of the laptop business). The stupid part he is referring to is the part that continues to sell their server hardware.
Not that I agree with him. I believe there are organizations who require the stability and robustness that IBM's servers provide. I also believe IBM's servers in part fuel their service side of the business.
-- john
These are the kind of jobs and businesses that need to stay in America.
See:
http://www.thejournalnews.com/newsroom/010902/09ib m.html in America.
The fact of the mater is any company can't run a business in the red indefinitly. And the date of this article suggests IBM has been bleading profits into the PC operations for some time.
And the web never forgets...
According to this website, in 1993 IBM created a PC dividion to compete agianst mailorder companies (Gateway, Dell, et al) and called that Dividion "Ambra".
The article states the Ambra division was miss managed and had poor customer service, leading to it's closure just one year later in 1994. The division would later be resurected as the IBM "Aptiva" line of personal computers many more of us know today.
As a college student I was very pleased with the support I received for my Ambra (386 I believe). The monitor went bad and IBM had a new one waiting for me at my dorm within 24 hours of the service call. I was sad to see Ambra go.
I only came here to do two things; kick some ass, and drink some beer...looks like we're almost out of beer.
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?
Maybe we'll see Athlon 64 PCs from "IBM" this way. Lenovo is a big AMD customer. They aren't insecurely limiting their AMD64 usage because of a fear they'll outshine Power architecture machines like IBM is. C'mon IBM, listen to your software engineers and sell/promote the good stuff.
It seems like you're implying that the 'generic white box PCs from China' are inferior to IBM-supplied boxes. That may be true, but need not necessarily so.
I think you could read IBM's move as: "we just can't/won't keep up with the price/performance of generic white boxes coming from China, so therefore there's no point in continuing to produce our own line". And there's also their customers, who may just be saying to IBM: "look, we're sorry, but we'll be getting our generic desktops from China now on, they're cheaper, but good enough to do the job".
That wouldn't stop IBM from cutting a deal with a quality supplier, put "IBM" labels on the boxes, and offer those to their customers. It seems IBM just feels it isn't worth it anymore to produce those desktops themselves. Makes sense, if you ask me. Plenty suppliers out there to choose from.
eXtreme Programming: Comment early, read often, reply frequently, moderate mercilessly.
Hey cool, I think we finally have the news equivalent to "yeah, but as long as it doesn't play Ogg files, I know I and three of my friends will never buy it"!
IBM's Thinkpad market has issues. The rest of the manufacturers are doing rings around them. AMD64's, 3 GHz Intel's, etc., while IBM still sits on 1.6 GHz/1.8 GHz. The base IBM laptop hardware may be built like a rock and look and feel like it, but when the purchasing public can buy a machine that has a widescreen display, reasonable sound, AMD64, FireWire, for half the cost of the Thinkpad, I know where the money ends up and it is not in IBM's pocket. Whenever you compare apples to apples, the bushel that costs less for the same quality will usually get purchased. Yes, I like the trackpoint better than a touchpad. I would rather use a mouse than a touchpad. I was thinking about buying an IBM laptop for myself but when I can get a laptop with better features and the latest hardware for half the cost, IBM dropped out of the running. Methinks that IBM rested on it name believing that because it says "IBM" on the lid that the crowd will buy their overpriced, antique hardware but they goofed on this one, big time, and they only have themselves to blame.
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 guess we'll find out how true the saying really is...
Nobody ever got fired for buying IBM.
I'll turn into a supernova and burn up everything. Well I'll turn into a black little hole and you'll turn into string.
It's interesting that some view Chinese companies (or any companies outside the US) as foreign vis-a-vis IBM. Last I checked, IBM stood for International Business Machines. I personally don't see it as a risk to their reputation.
Linux at home
All commodity computers (such as laptops) are built in Asian factories. I would go so far to say that all laptops, regardless of brand name, are built in the same dozen factories or less. Some laptops are designed by the manufacturer and simply rebadged. Higher end laptops usually get more input from the brand name owner (e.g. IBM, Dell). Some laptops are essentially built in Asian, but are "assembled" in North America, or Europe, for PR reasons. Now some companies will say everything is built in "our factory." Understand that the manufacturers are more then happy to let a brand name claim that a manufacturer's factory is owned by the brand name. And with a little creative contracting it almost true.
Now before anyone points to Apple and claims that Apple designs everything, let's get something clear: Apple gets alot of help from the manufactureres. They would be foolish otherwise. There is a big difference between an excellent design, and a design that is cheap an easy to build.
Many big servers are still built in North America and Europe. This is partly because of the lower volume. The other reason because there is a perceptions that the North American and European workforce is better educated and more capable at performing testing. Durring the manufacturing process commodity computers and parts get very little testing. (Testing is time consumeing and expensive.) Mid range servers and up will get more testing. Testing varies from checking that all components are properly attached, to a full system integration and power up with regression tests. Due to the cost of some servers it is sometimes worth while to fix manufacturing errors. If a commodity computer fails a test it is usually tossed.
Some commodity components will also be manufactured in North America early in the life cycle. For example my ATI card was built in North America while they worked out the bugs.
Because americans aren't the most polluting populace in the world?
They very well may not market them using the IBM name and logo, but rather simply market them as IBM's desktop solution. After all, IBM did scrapped its NetVista thin client line and started selling thin clients from Neoware. It's been done before.
I wonder, since the only place left for Intel chips at IBM will likely be in low-end servers, will IBM create a low-end PowerPC chip to compete with Wintel at some point?
Systemd: the PulseAudio of init systems
china doesn't need to buy U.S. companies when it can buy the U.S. government (nakedly, in the form of debt, and more covertly, in the form of poltical contributions).
of course, you could say that (top) U.S. companies and the U.S. government are almost indistinguishable by now, and we'd both be right...
Though my Thinkpad T40 was assembled in China, I understand that most, if not all, of the Thinkpad design came from your excellent Japanese lab. As far as I can say, your lab is one of the few that understands the balance between durability, usability and portability: Unlike Dell and HP ("bulky, heavy, suitable only for U.S. where people don't walk"), and unlike some Japanese makers ("make everything smaller, no matter how fragile it gets, and you have some unusable tiny keyboard as a bonus!"), your lab always provides some excellent machines that I can actually carry around and comfortably type.
IBM, please don't kill these guys. If possible, please consider branching out a new company specializing in laptops (just as you did for Lexmark). Cheap hardware makers don't need these guys I think, and I don't want to see your lab simply closed (or converted to a software lab). I see Apple is making a great progress in this "durable, portable and usable" segment, but I hope there's some healthy competition even in such a small niche.
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.
> AS/400 machines are minicomputers, not
> mainframes. They are also quite competetive on
> the market, and have been around for almost 20 years.
Perhaps competitive if by competitive you mean in the same sense that you can probably find some Burroughs B4800's still in service and being maintained expensively -- but not as expensively as porting the software.
(-1: Post disagrees with my already-settled worldview) is not a valid mod option.
this is the truth..
So why should this suprise me.. Note my
last machine was made from chinese parts, I
bought it off of Ebay.. And its worked like a charm,
not once did I have to send it in for warantee service.
Just say no to license servers!!