Slashdot Mirror
Going, Going, Gone: IBM Sells PC Group To Lenovo
It was rumored before, but now, as Rick Zeman writes, "It's official: According to news.com, IBM has sold their PC business in a complex arrangement where, 'under the deal, IBM will keep an 18.9 percent stake in Levono. Lenovo will pay $1.25 billion for the IBM PC unit and assume debt, which will bring the total cost to $1.75 billion. Lenovo will pay roughtly $650 million in cash and $600 million in securities.' Plus, Lenovo will be able to use the IBM and Think names for 5 years."
That's a damn expensive IBM PC unit. The clones are a lot cheaper, people.
Reuter's story on this is here.
In the beginning the universe was created. This made a lot of people very angry and is widely considered as a bad move.
Wow, hard to think the IBM Thinkpad I'm typing on now will be made by the Wal-Mart of computer manufacturers. The FA mentions that Lenovo doesn't spend much on R&D, doubtful they would make drives that survive the 6' fall IBMs do. In my circles, IBM laptops are known as "expensive", "tought", and "secure". Especially since many of them come with BIOS locked biometrics. Sad to see this happen, but I guess the PC market is going commododity.
I'm banking on "Thoughtpad". They can use it after the 5 years is up on using the Think brand, and it carries a convenient past tense.
Will miss not having a T1000 eventually...
I only buy thinkpads for my own use... I like em better than anything else and they've been very stable and durable for me.
I'm not anti-social, I'm anti-idiot.
The most interesting bizarre theory behind some of this was posed at The Register. They claim that IBM may be interested in buying or allying with Apple. It makes some sense, Apple are certainly one of the big vendors for IBM's Power chips, and it would give them a nice UNIX desktop to push, while giving Apple a little more "corporate credibility" and give them a chance to creep into the business desktop market more.
Realistically though, I just don't quite see it. I don't think Apple could quite take the image hit that being owned by IBM would entail, nor do I think the gains would really suit IBM that well. Perhaps some sort of closer alliance may result, but I would expect that to be about as far as things go. Still, and interesting but of completely wild speculation.
Jedidiah.
Craft Beer Programming T-shirts
Try http://www.lenovogrp.com/ (or http://www.lenovo.cn/ if you know Chinese). I think Thinkpad and other IBM gadgets will decrease as much in quality under Lenovo as Volvo has decreased in quality under Ford's oppressive measures (or Saab has under GM's). It's just a transaction of money, estate and control, the quality will depend on wise management, regardless where the production is.
This would give them a $50-75 cost disadvantage versus everyone else. Now they can support Linux 100% and leverage the Power / grid architecture into other areas. Incl. making reference designs available to OEMs
Help fight continental drift.
"I think Thinkpad and other IBM gadgets will decrease as much in quality under Lenovo as Volvo has decreased in quality under Ford's"
So quality is going to go massively up, and the computers will become very trendy and liked instead of mocked by the masses? Sales will increase, and people won't think of their products as boxes anymore.
Gee this is horrible.
This past year IBM's Technology group and their Systems group were merged into the "Systems & Technology Group" (yeah, I know, astoundingly creative) to get better synergy between the semiconductor (technology) and server (systems) parts of the business. The PC division being sold definitely does not include the technology/chips group, whose assets alone greatly exceed $1.25B
Who do you get to be an expert to tell you something's not obvious? The least insightful person you can find? -J Roberts
I have a ThinkPad T40p. One day, I dumped a whole glass of water on it. The ThinkPad kept running. I turned it off and removed the battery and disassembled it to dry it out. That's when I realized that the ThinkPad had designed-in channels for liquid to flow. It avoids any of the sensitive parts. I just used some paper towels to dab out the water, and let the keyboard dry. Powered it on and it worked like a champ.
I live near the IBM PC Division Headquarters (RTP North Carolina). On the news the General Manager of that division (Fran Somebody) said that since there was very little overlap between the two companies that most of the current employees will remain on. She went on to say that her and her entire management team would remain. Hopefully this bodes well for the quality.. at least in the short term until its decided where money could be saved at. I would suspect that eventually those jobs would be moved overseas where the labor is cheaper. The lady also said that the deal wouldnt be final until 2Q 2005.
Tis better to be silent and thought a fool, than to open your mouth and remove all doubt --Abraham Lincoln
1. Merges divisions A and B to create "synergy."
2. Split the AB divison to improve "focus."
3. Repeat steps 1 through 3.
I honestly don't think this has anything to do with merging with Apple (a stupid rumour) or for that matter, even leveraging Linux over Windows. It's really just shedding an expensive division, saving money and increasing profitability.
It's explained within the first page of the article:
"If it goes through, the deal would allow IBM to continue its shift from selling so-called commodity products toward selling services, software and high-end computers. Although it helped make PCs a global phenomenon, IBM makes little profit from PCs and often loses money, despite the fact that it's an $11 billion business for the company."
IBM's profits come from consulting and integration services, not from selling desktop machines. The price of Windows, Linux or otherwise, or what strategy they push on the desktop is not a big deal in this case.
What I think it comes down to is they're holding onto a division that is building commodity boxes and that's a tough game with competition like Dell. With ODM's and OEM's doing more and more of the design work these days, really all IBM needs is to pitch the stuff, which isn't affected by the sale of this division. The consulting and sales groups already push the hardware in major deals.
If you read the article, the market is slowing:
"That period will see average annual unit shipments slow to 5.7 percent and revenue growth subside to 2 percent, Gartner predicted."
Hence, you're not going to see any more profits from an area which already has razor thin margins. Give the business to the Chinese, since they know how to reduce costs. The biggest problem Asian manufacturers have today is not engineering skill or manufacturing capability. It's branding and marketing. Lenovo bought the IBM brand for five years and it's worth every penny.
It's pretty obvious the American part of the company will be cut, probably because they're expensive:
"It is going to take quite a long time to consummate, and the only way I see this running properly is that if a lot of blood is shed at IBM PC."
The desktops are already made and built by a Chinese firm (as noted in the article) while the money in laptops is made by large corporate sales contracts, not individual units.
In the end, I think it's just getting rid of an unprofitable part of the business, not some super strategic technology move.
IBM stopped making personal computer before Apple. I'm sure there's some kind of ironic victory here somewhere...
I can't believe this crap got modded insightful. It's quite clear that Alomex has no personal experience whatsoever with Lenovo. Lenovo (Legend, Lianxiang) is a very high quality company, that has managed to essentially monopolize much of Asia's laptop and desktop PC market for quite sometime now.
The reason you don't know much about them if you live outside of the greater China area is not because they're of poor quality, it's because the guy who runs the company has his head screwed on straight. I saw a very interesting interview with him when I was in Hong Kong a few months ago, where he was asked if he was going to take his products global. He said that it was definitely on his mind, but that he wanted to develop a strong lead in China, which he perceives as the 21st century's major market, before moving into Europe and the US.
Lenovo laptops are of high quality make and are priced very competitively. They're very widely regarded here (Shanghai) and my personal experience with them is that they're put together very well, better than say, Sony laptops.
The Chairman Mao dig is just about the stupidest thing I've ever heard. All it does is demonstrate that Alomex has never been to China and knows diddly squat about it (and if that's not the case, then he's a troll, plain and simple.) Chairman Mao has essentially no credibility in China (which isn't surprising at all) and while the CCP may continue to give him face in certain respects (it's not considered polite to speak ill of the dead here) any marketing rep worth his snuff knows that it's absolute suicide to try to connect your product with Mao and come out on top. The common people (especially in the demographic that buys computers) were mostly pretty badly burnt by the Cultural revolution and as that wasn't very long ago it remains fresh in people's minds.
China is, at this point, anything but communist. Anyone that makes this accusation is just showing himself to be a bubbling moron.
Lenovo, in particular, is not a state owned company (there are very few of these anymore, and the Chinese government is dumping them/privatizing them as quickly as they possibly can), it's profitable, successful, and international.
With their local connections, they will do well. I own a Thinkpad X40 and I personally am not at all concerned that quality will drop. Thinkpads are expensive machines, and if Lenovo keeps them at their current price, they'll be able to make an absolute crapload of money without dropping the quality at all, based on their current offerings.
This China trolling from desperate Americans worried about losing their economic and technological dominance in the near future needs to stop. I'm American, and let me tell you, no amount of whining is going to stop the PRC. The sleeping dragon is waking and the world, as Napoleon predicted, is trembling.