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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."
If how Lenovo shat all over the ThinkPad line is any indication, you'll be sorry if you don't abandon ship now.
Actually, think of it a being "Business Recycling." IBM is selling it, because it can no longer run it as a successful business. Lenovo is buying it because they believe they can.
When large trash day comes around here at the ranch, there are always folks picking up stuff that I no longer need, but they think that they can do something useful with.
Schroedinger's Brexit: The UK is both in and out of the EU at the same time!
We should tariff lopsided trading countries like non-plutocracies do. The "Adam Smith" models that suggest even lopsided trade is "good" only focus on general averages and ignore stability (bank/currency bubbles) and unequal distribution (richer rich & gutted middle).
Table-ized A.I.
And considering the figures on Levovo last I saw them they are on to something as they seem to be able to do just fine with the lower profit margins that IBM scoffs at.
Of course i believe this is part of a larger disease that is infecting the west and is really gonna bite us in the ass, I call it "iMoney or bust". What happens is a company will just throw away a successful business because it isn't making double digit profits like iToy and end up hurting the company in the long run. the best example of this right now is MSFT, as PCs are still selling hundreds of millions a year (or at least they were before Win 8 came out) and making billions but because they aren't making iMoney on them MSFT will happily burn that entire business rather than accept low margin high sales business is still good business.
This is one thing I have to give the Asian companies a LOT of credit for, they realize that consistent single digit profits? Is still fucking PROFITS and are more than happy to gobble up businesses where they can make a solid 4%-10% profit whereas thanks to the stock market being badly distorted by speculators here in the west a company that makes profits but not iMoney is punished by falling stock prices. This is why Dell wants to take it private, if you look at their stats they are actually back to making what they were before the 07 downturn yet because that ain't iMoney their stock still sucks.
You watch Lenovo will buy it, make solid single digit profits with it quarter after quarter and use that money to better their business. that is fucking smart but sadly being smart in business is punished here in the west, either you make iMoney or you watch the stock burn. Ironic as even Apple isn't able to keep making iMoney, hence why they are still selling previous versions and came out with a cheaper 7 inch.
ACs don't waste your time replying, your posts are never seen by me.
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.
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.
I'm currently in China and can tell you that you are very diluded if you think of everyone here as a slave. They will be able to keep it up because life in here is very cheap. So when you see what you would consider a crappy wage in the west, it turns out that is a lot of money here. Plus the high school system is one of the best in the world, at least in Shanghai, and free nonetheless. So I think you might want to take a trip here and see for yourself what's going on.