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IBM In Talks To Sell x86 Server Business To Lenovo
FrankPoole writes "According to CRN, IBM is in serious negotiations to sell its low-end x86 server business to Lenovo, which is looking to grow its server revenue. If the deal goes though, it will be the second time in eight years that Big Blue has exited a major hardware business and sold the operation to Lenovo. IBM sold its PC business to Chinese computer maker in 2005."
Lower overall revenues for higher profit margins? Smells like an MBA.
The summary should probably also mention that IBM sold off their entire storage division to Hitachi...
Margins are pretty tight in that business. They'll do much better stcking to their mainframe business charging ridiculous prices for MIPS to customers that can't afford the cost of migrating.
...sell off the one division that does something useful, leaving you with a company that sells useless, bloated "services" that no-one really needs. I know this, I worked for those services. Worst fucking three years of my life, they totally wasted my skill set. At least I was able to extract a lot of money from them, though.
They've still got System Z mainframe line, and I can't see them selling that business unit off, but they ought to just drop the M and call themselves 'International Business'.
That's it, boys! Sell all that you own to the Chinese so you might have another decade of living the high life while doing nothing to earn it.
All that Western civilisation collectively worked on in the past 200 or so years has been given away to the Chinese for peanuts so we can sit on our collective asses and do nothing for about 20-30 years. Do you think that China will be paying us royalties once they figure out how to make a Core i7 processor themselves? F**k no, experience should tell you better.
Who here is still using the x86 in their server farms? I'm interested in hearing why.
Yeah, because this worked out so well for the Thinkpad.
From geek laptop of choice, to cheapl plastic Chinese crap.
When IBM decides to throw away its garbage, Lenovo will come begging
Muchas Gracias, Señor Edward Snowden !
I'll be back in Herkimer in two weeks, I'll be sure to stop by.
If how Lenovo shat all over the ThinkPad line is any indication, you'll be sorry if you don't abandon ship now.
A quick buck, or a quick death in a dying market?
They need money for shit like this:
felt strongly enough to send 200 executives to Capitol Hill to convince lawmakers to back the cybersecurity bill.
http://www.ibtimes.com/cispa-2013-passes-house-why-ibm-champions-controversial-cybersecurity-bill-despite-obamas-veto
You sir are a genius! How could no one in any of those huge companies with thousands of attorneys and accountants come up with your idea? Please give me your contact information so I can warn them of their impending errors.
Only the State obtains its revenue by coercion. - Murray Rothbard
last I heard anyone doing real (read: not sales) work was being outsourced to whatever country was cheapest at the time. Why would I bother hiring IBM to do that when I can do it myself?
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I just hope they are not going to be relying on ISS and their managed services..
US's comparative advantage is bull$hiting, not cranking out cheap commodity widgets, and there is more room for bull$hitting in services. ...until China realizes there is a bull$hitting gap, catches up, and sticks Vietnam or S. Africa with the hardware grind.
Table-ized A.I.
The article should read the low end of the x86 business. IBM has already picked over the best parts of System X and moved them into PureSystems and has also started co-designing x86 server hardware with Hitachi for PureSystems. So they are going to be focusing on integrated server, networking, and storage plays instead of just plain standalone servers. Really trying to mimic the success EMC and NetApp have had partnering with Cisco and their UCS platform.
...will no longer sell any business machines. Interesting.
Basically, this could be tolerable to very bad for the rest of IBM. For the x86 business being ejected, it's probably overall the best hope it has.
A good chunk of the candidates to buy IBM equipment consider IBM a competitor on *some* front. Many doors to sales are closed simply because companies do not wish the fund their competitor in any way whatsoever. x86 seller might want to partner with software vendors to have a nice reference platform, but those options are limited by the same reality.
On the flipside, you might think at least their x86 gets a boost from being the platform of choice for IBM service and software. The thing is, when other groups *do* bundle or otherwise bolster number of IBM x86 servers, it's pretty much always under the scenario of the servers being sold at cost to let the other more favored divisions take the credit, exacerbating the perception of the x86 business as a 0 margin endeavor (in part a self-fulfilling prophecy). If an independent company, they no longer have a common leadership forcing the stepchild to take the beating for the favored child to experience heightened success.
So for the x86 business hypothetically on the way out, they have a bit more free reign and perhaps a leadership that can do things with more efficiency and perhaps accept a profitable business as a success rather than leadership that wants to chase high margin opportunistic that are not sustainable with a goal to always throw it away in short order (basically pumping the fortune and reputation acquired through a century of legitimate effort into get-rich-quick schemes until the well runs dry)..
Now for the rest of IBM, this might be neutral or it could be fairly bad. Internally the speculation is that they retain only the Flex system stuff and jettison the rest. I'd call this the worst case scenario for IBM endeavors like pre-loaded software appliances and service. Groups are under pressure to use IBM hardware first, and if they are forced to cram their offerings into Flex, they will frequently be settling for a poor fit. Any architecture like that one makes compromises (notably, storage density for scenarios like Hadoop cannot be well served by Flex). For other workloads, Flex offers value at higher cost, but sometimes that extra value is simply irrelevant to a usage scenario. This means that the hosting provider ambitions get crippled because they are forced to use Flex at higher cost despite not offering substantive value relevant to the needs. I'm a fan of Flex and in some places the value is highly relevant, but the pricing makes it a challenge for a lot of places that have moved on from premium priced x86 offerings to lower end scenraios where quality servers are still appreciated, but some of the more stringent resiliency requirements are met by software architecture eliminating the need for particularly resilient hardware designs..
Now if IBM keeps both their Flex line and their weird, low-cost 'high density' lines, then maybe it's ok. However, I don't see how just bladecenter, rack and tower servers would present 6 billion of value to anyone, so I must presume that nothing more than Flex might be withheld. IBM might also be ok if they rebadge/resell the hardware developed by the external party, but I don't see them having such will (their sales force already avoids talking about certain *IBM* products that might work out of fear that they don't get commission as it might migrate to another sales teams turf).
In the long term, the leadership in IBM seems hell bent on the '2015 roadmap', even though the only path there basically means scrapping most of the business for parts and not having much to work with come 2016, leeching the life out of the company as they go. From what I've seen, the 'leaders' willing to put the most outlandish stuff in a powerpoint to executives wins, regardless of how much it relates to reality. One group with real positive results loses to another that actually loses money because the first group presents a sustainable, real
They don't have a major refresh every year, years with refreshes appear to have crazy year to year growth followed by a year of apparent sharp decrease. One 'bad' year is not unexpected if preceded or succeeded by a certain event on their roadmap.
XML is like violence. If it doesn't solve the problem, use more.
Being as the intellistations and some intelliservers were already done by lenovo, the deal won't be noticed by many.
Damn_registrars has no butt-hole. Damn_registrars has no use for a butt-hole.
My only notebooks brand/model is ThinkPad. Now, with Lenovo has done to ThinkPad, I have no choice but to find other brand instead. My preferred server brand was also IBM. If the history repeats itself, I guest I have to find other brand of server.
IBM sold them a division that builds commodity hardware. You know, the same shit you can get from, Dell, HP, Supermicro, ASUS, and so on. They just assemble tech bought form other companies. Now that isn't worthless, people buy a lot of servers, but it isn't something hard to figure out.
They didn't sell their processor division, which doesn't make i7s anyhow, that's Intel.
In terms of making their own i7, well ok, good luck. IP issues aside (they don't have an x86 or x64 license like AMD does) there's the whole thing that designing a processor is pretty hard. China decided they needed their own, home grown, processor, and by "home grown" they mean "used MIPS architecture because designing an architecture is hard." So they've thus far managed to produce a MIPS64 processor, that they don't fab (STMicro fabs it for them, they are European) that runs at 1GHz on a 65nm process.
That might be impressive (well minus the using other people's architecture thing, and the fab thing) except that Intel is making 4GHz processors on a 22nm process right now, and has a 14nm fab that is getting ready for pre-production in Arizona (will be up fully next year).
This idea you have that the US does nothing, particularly nothing high tech, is badly misguided. You might want to do a bit more research and find out all the things it does do. Processors would be a big one, being that not only is Intel a US company but most of its fabs are in the US but it is hardly the only one.
Not speaking to the business wisdom of IBM's move (IBM has been making bad decisions for awhile IMO) but stop acting like this is some super secret tech they sold. This is commodity manufacturing. For that matter it is commodity manufacturing that Lenovo already does some of. They make servers, just not many of them. This is an effort to grow their market quickly.
Look, rometty would do well just to allow the Chinese gov. to buy them, rather than piece this out this way. They have nothing to replace it with, and they are giving away all of their IP.
GE, HP, Sun, Dell, etc were once top notch companies ran by engineers or business ppl who actually care about their companies.
Now, they are ran by MBA's that destroy the companies just so that they can get a fast buck.
So sad.
I prefer the "u" in honour as it seems to be missing these days.
That they sell to go with the servers? All three of those items are high margin and more than make up for the lack of margin on the servers themselves. How long is it going to take Lenovo to start selling enterprise storage or networking gear? They had better get some kind of agreement from lenovo that they won't sell gear in any of those categories for the next decade or two.
I can't really see people calling up lenovo and ordering a bunch of servers, and then calling up IBM and ordering storage. If nothing else they are going to call up netapp, EMC and Snoracle as well.
Maybe IBM doesn't care about the "low end" stuff people are connecting to their x86 servers. Sell a few less DS3500s milk the DS8k customers some more.
The problem is that "low end" x86 hardware is slowly but surely eating into what remains of the unix/midrange "server" market. Sure a couple customers here and there buy a mainframe and run zlinux on a couple IFL's they basically get for free after buying the mainframe. But in the end, can they support a business on such a tiny portion of the market? Even major mainframe customers like American Airlines have publicly stated they are moving away from the mainframe.
I suspect they will continue as they have for the last decade, selling pieces of the company, moving all the engineering to cheap labor countries, and charging their existing customers a heavy ransom for the privilege. But at this point in time IBM is beginning to look like Sun circa 2001.
They see high margins on the current z/p systems and figure the same margins *must* be milked from x86 or it's not worth playing at all. Reasonable company might realize that it might not be the most sustainable practice to essentially punish your customers with higher-than-needed prices. IBM so obviously abuses the vendor lock in and thus companies are eager to jump ship.
IBM is pretty much guaranteeing their irrelevance to 99% of the market in the pursuit of the delusion that the entirety of the IT market is forever trapped in the 90s.
The Thinkpads that IBM designed (hell a lot of things that IBM designed) were high water marks for the industry. Lenovo assembled them but they have not shown me that they, as a company, are anymore committed to producing such a high quality product now that they are responsible for the brand than are any of the other mainland shit companies.
I turned to HP for a while, they had something worth buying for a bit, but I'm at a loss for my next round.
I'm seeing a lot of shit right now. Kinda hoping that Mr Dell can pull off his buyback and make something worth buying.
--
If the Bible was like Wikipedia, literal believers would all be aware that Jews don't need to be saved. That killing isn't a sin. That Paul was a misogynistic self-hating homosexual. Not hating - just saying that Christianity is a minority belief and that Wikipedia is an open system to everyone else that is aware of external ideas and evaluations.
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I had a M1 Carbine made by IBM for a while.
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Anybody buying standard 1-3U servers from IBM must be seriously braindead.
Internal layout is horrific. Do not try to expand anything anytime. Expanding a backplane in an x3650 to support 16 drives took 2 hours of reallocating stuff.
The layout and build instructions weren't even logical for anybody with only 2 years of server/pc/hardware experience.
Boot times are worst in the whole industry (3 minutes upwards).
Performance of memory controller usually ~5-10% below the competition.
Prices non-competitive.
IBM has been inferior hardware ever since.
A car license in Shanghai would cost you $10k, a crappy Chinese designed car would cost $10k and is full of flaws and may cause cancer due to the materials used, if you want imported car it starts with $30k. Apartment price is probably $5k to $10k per square meter, there's no rent control so rent is increasing every year. Yes if you buy food and wares from noname vendors you can save a few bucks, but do you know what it will do to your health in the future? Also education, it is free if you can accept any school no matter the quality. If on the other hand you want your children to have a chance to go to a good university, you probably want your child to go to a good school, which would cost $10k to $20k per year.
So to sum it up, if you don't care quality then living in China is cheap, but Chinese is not stupid, they want quality life as everyone else, this is why wage of Chinese labor is increasing fast (inflation is also a factor, but that's another topic).
IBM X-Series are fantastically well-built systems. I work with a lot of Fortune 100 companies and most datacenters have either HP or IBM for their tier-1 applications. The problem is that as apps become more stateless and more capable of tolerating downtime in different layers, the robustness, stability and even manageability of the server platform becomes less relevant. I think that's the reason why I'm starting to see a lot of low-end or even custom built 1U boxes and blades pop up in datacenters that otherwise would have purchased IBM or HP.
I think IBM is leaving the space because they see that trend and they can't effectively compete purely on price given their cost structure, while Lenovo has a better chance at making that happen. It's a simple business decision.
1. What's better in China than the US or other western countries? Cheap housing/cars/gas? Good quality in consumer products? Safer food? Clean air/water? From my point of view, on every basic human necessity, China lacks behind the US and other western countries.
2. If China is so good, why there're very few US citizens immigrating to China, while there're tons of Chinese waiting to immigrate to the USA? Note I'm talking about immigration, not tourists or short term stays, but moving to the country for good. This will tell you which country is really good.