Lenovo Set To Close $2.1 Billion Server Deal With IBM

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Lenovo Set To Close $2.1 Billion Server Deal With IBM

Posted by samzenpus on Monday September 29, 2014 @02:15AM from the power-up dept.

An anonymous reader writes Lenovo has announced that it will be closing the acquisition deal of IBM's x86 server business on October 1. The closing purchase price is lower than the $2.3 billion announced in January because of a change in the valuation of inventory and deferred revenue liability, Lenovo said. Roughly $1.8 billion will be paid in cash and the remainder in stock. Lenovo says it had "big plans" for the enterprise market. "We will compete vigorously across every sector, using our manufacturing scale, and operational excellence to repeat the success we have had with PCs," the company added.

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Server Admins Everywhere are Saying... by Anonymous Coward · 2014-09-29 02:20 · Score: 3, Funny

Dude, you're getting a Dell!
1. Re:Server Admins Everywhere are Saying... by ArcadeMan · 2014-09-29 02:23 · Score: 4, Funny
  
  Dude, you're getting Chinese spyware!
  
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2. Re:Server Admins Everywhere are Saying... by some+old+guy · 2014-09-29 02:54 · Score: 4, Insightful
  
  Which, of course, is a nice complement to the existing American spyware.
  
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3. Re:Server Admins Everywhere are Saying... by ArcadeMan · 2014-09-29 03:07 · Score: 5, Interesting
  
  In the near future, there's gonna be a "War Games" happening inside every fucking hardware component of our systems. Over 50% of the energy will be wasted on spyware fighting each other, 45% will be waste heat, 4% will be wasted by non-military tracking by Google/Facebook/etc and only 1% of the energy will go toward actually doing something useful.
  
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4. Re:Server Admins Everywhere are Saying... by radarskiy · 2014-09-29 03:27 · Score: 1
  
  Dude, you've been getting Chinese spyware!
5. Re:Server Admins Everywhere are Saying... by peragrin · 2014-09-29 03:54 · Score: 1
  
  Since the NSA is modifying Cisco and fell hardware to spy on people I am buying all computing hardware from Russia.
  
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6. Re:Server Admins Everywhere are Saying... by cayenne8 · 2014-09-29 04:58 · Score: 5, Insightful
  
  Not to mention...Lenovo fucking up the quality of the product after they get ahold of it.
  The old IBM THinkbooks used to be built like a tank, but a Lenovo one today, is so much plastic, I had loose USB ports, etc.
  I'm guessing the servers will get the same "cheapening" over process.
  A former poster is right...might as well look to get a Dell, and at least not worry about Chinese spyware in addition to the cheaper construction quality.
  
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7. Re:Server Admins Everywhere are Saying... by Anonymous Coward · 2014-09-29 05:07 · Score: 0
  
  only 1% of the energy will go toward actually doing something useful.
  1%??? Wow! I'm used to around .25% right now....
8. Re:Server Admins Everywhere are Saying... by Junta · 2014-09-29 05:34 · Score: 1
  
  at least not worry about Chinese spyware
  Considering the reality of the manufacturing and supply chain of *all* the vendors, there isn't a scenario where you are justified in not worrying on that score. The nationality of the CEO doesn't really help or hurt the ability of intelligence agencies to infiltrate product development and manufacturing.
  
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9. Re:Server Admins Everywhere are Saying... by __aaclcg7560 · 2014-09-29 05:39 · Score: 1
  
  Dude, you're getting Chinese spyware!
  Every Lenovo is equipped with a backdoor in the BIOS. You're getting Chinese hackers AND spyware!
10. Re:Server Admins Everywhere are Saying... by ArcadeMan · 2014-09-29 07:05 · Score: 1
  
  Chinese backdoors, American security profiling AND Russian hackers all rolled into a single, easy-to-use unit? Sign me up!
  
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11. Re:Server Admins Everywhere are Saying... by Anonymous Coward · 2014-09-29 07:23 · Score: 0
  
  That comment makes the "In Soviet Russia, computing hardware spies on you" meme at least twice as funny.
12. Re:Server Admins Everywhere are Saying... by brxndxn · 2014-09-29 08:19 · Score: 1
  
  I agree with that sentiment. As far as business laptops go, Thinkpad went from the best laptop you could possibly buy (especially their 'p' models) to a sub-average brand that gets beat by both Dell and HP. Of course, Lenovo, Dell, and HP all make shitty consumer versions in their race to the bottom. Now, Mac has the clear premium laptop crown and it does not look like anyone is close to catching up.
  It sucks to see a company buy a brand and to know their full intention is to ride that brand into a lower quality venue. There is no fucking way Lenovo plans on buying the IBM server brand and increasing the quality.
  
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13. Re:Server Admins Everywhere are Saying... by maestroX · 2014-09-29 08:21 · Score: 1
  
  Useful as in harvesting virtual coins?
14. Re:Server Admins Everywhere are Saying... by radarskiy · 2014-09-29 16:48 · Score: 1
  
  Why do you think that the Chinese manufacturing employed by Lenovo or Dell is any better or worse than the Chinese manufacturing employed by IBM?
IBM is dying by Anonymous Coward · 2014-09-29 02:22 · Score: 1

IBM is dying and Netcraft doesn't have to confirm it. IBM, once the great manufacturers of computer systems has become a ghetto of cheap sub-par IT labor services.
1. Re:IBM is dying by ArcadeMan · 2014-09-29 02:24 · Score: 3, Funny
  
  Are you calling them Incompetent Bullshit Managers?
  
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2. Re:IBM is dying by i+kan+reed · 2014-09-29 02:30 · Score: 4, Insightful
  
  Which they did purposefully. They saw the overcompetitive desktop market of 10 years ago, and went "oh well, hardware's doomed" and moved exclusively into a different overcompetive field, one where being a large corporation is actually a hindrance. The Lenovo spinoff actually created a moderately profitable long-term sustainable company.
3. Re:IBM is dying by Anonymous Coward · 2014-09-29 02:30 · Score: 1
  
  wtf does ibm even do that is relevant anymore.
4. Re:IBM is dying by mwvdlee · 2014-09-29 02:34 · Score: 2
  
  Yup. a ghetto of money-printing mainframes, application servers, supercomputers and cheap sub-par IT labor services.
  
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5. Re:IBM is dying by ArcadeMan · 2014-09-29 02:38 · Score: 2
  
  They're useful for the Wisconsin Organization Of Spacemodeling Hobbyists.
  
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6. Re:IBM is dying by biptoe · 2014-09-29 02:44 · Score: 2
  
  No, Inferior But Marketable.
7. Re:IBM is dying by tomhath · 2014-09-29 02:46 · Score: 1
  
  FTFA:
  
  IBM, however, will still hold on to its System z mainframes, Power Systems, Storage Systems, Power-based Flex servers, PureApplication and PureData appliances.
  Are they holding on because they still make a profit on those lines? Or because they can't unload them? I suspect the latter.
8. Re:IBM is dying by NatasRevol · 2014-09-29 02:56 · Score: 2
  
  As someone whose company supports mainframes indirectly, I'd suspect both.
  
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9. Re:IBM is dying by Anonymous Coward · 2014-09-29 02:57 · Score: 5, Informative
  
  Lenovo's not an IBM spinoff, it's a Chinese electronics manufacturer, a company with a separate past. They had enough cash to buy IBM's thinkpad business, then the desktops, and now some of the Intel servers.
10. Re:IBM is dying by alexander_686 · 2014-09-29 03:48 · Score: 5, Interesting
  
  IBM's stated goal is to ditch the low end commodity business and invest in high end high touch business. i.e. custom solutions provide by consultants and custom hardware. IBM has been shedding their commodity business for years. When Lenovo bought their desktop / laptop business – servers where not commodities. Now the x86 servers are – so away they go.
11. Re:IBM is dying by Enry · 2014-09-29 04:01 · Score: 3
  
  The mainframe market is VERY lucrative.
12. Re:IBM is dying by timeOday · 2014-09-29 05:18 · Score: 4, Interesting
  Which can easily result in the business streamlining itself out of existence:
  
  Clayton Christensen explains why the basic thinking taught in business schools and promulgated by consultants is killing innovation and the US economy:
  Christensen retells the story of how Dell progressively lopped off low-value segments of its PC operation to the Taiwan-based firm ASUSTek - the motherboard, the assembly of the computer, the management of the supply chain and finally the design of the computer. In each case Dell accepted the proposal because in each case its profitability improved: its costs declined and its revenues stayed the same. At the end of the process, however, Dell was little more than a brand, while ASUSTeK can-and does-now offer a cheaper, better computer to Best Buy at lower cost.
  Why is this happening? According to Christensen, the phenomenon is being
  "driven by the pursuit of profit. That's the causal mechanism for these things... The problem lies with the business schools which are at fault. What we've done in America is to define profitability in terms of percentages. So if you can get the percentage up, it feels like we are more profitable. It causes us to do things to manipulate the percentage....
  Thus when a firm calculates the rate of return on a proposal to outsource manufacturing overseas, it typically does not include:
  
  The cost of the knowledge that is being lost, possibly forever.
  
  The cost of being unable to innovate in future, because critical knowledge has been lost.
  
  The consequent cost of its current business being destroyed by competitors emerging who can make a better product at lower cost.
  
  The missed opportunity of profits that could be made from innovations based on that knowledge that is being lost.
  
  cite
13. Re:IBM is dying by Anonymous Coward · 2014-09-29 05:36 · Score: 0
  
  a ghetto of cheap sub-par IT labor services.
  I don't know about the 'cheap' part. Well at least not in the sense of 'inexpensive'. Maybe cheap for IBM, but not for IBM clients.
14. Re:IBM is dying by ebno-10db · 2014-09-29 05:41 · Score: 2
  
  The problem with those things is that they require thought and judgement, which if they ever existed in the students, the B-schools expunge. Simple-minded "numerical" analysis is what they emphasize. Not everything that can be counted counts, and not everything that counts can be counted.
15. Re:IBM is dying by MightyMartian · 2014-09-29 05:56 · Score: 1
  
  I'm sorry, that reference went right over my head...
  
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16. Re:IBM is dying by roman_mir · 2014-09-29 05:57 · Score: 0
  
  Business in USA naturally follows the guidelines set by the government, which itself puts an overwhelming emphasis on 'improving' numbers and it does it by redefining the scales and de-emphasising absolute values.
  The so called 'GDP', the so called 'CPI', the so called 'core inflation', the so called 'unemployment rate' and various other measures are used to manipulate the perception of the economy by the markets and individuals to the great detriment to the actual economy and thus those very individuals.
  The real numbers are not taken into account. Destructive inflation is now touted as an economic imperative and falling prices are the 'dreaded deflation'.
  In the world where everybody lies to everybody, just another lying set of numbers at Dell is not a big deal until it too leads to destruction.
  
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17. Re:IBM is dying by Anonymous Coward · 2014-09-29 06:18 · Score: 1
  
  IBM's core enterprise markets aren't exactly overcompetitive.
  - Itanic is all but dead, and was always a distant third ahead of x86, but far, far behind POWER and SPARC on the high-end and upper-midrange tiers.
  - DB2, while a distant second behind Oracle in the enterprise DBMS market is slightly ahead of MS SQL, and the market effectively has only 3 major players.
  - As far as their midleware stack goes, until Oracle acquired Sun Microsystems, IBM was the only vendor able to provide a full, single-vendor stack top to bottom.
  - They're almost alone in the ultra high end segment (mainframe class), with Oracle/Fujitsu (with the M-Series) a distant second, and I don't even know if HP still has their SuperDome line going.
  They got rid of their desktop business, and are now getting rid of their low-end server business, IBM wasn't particularly competitive in this market anyway. There's more to it than the low end x86 market, the high margin business is in the topmost tiers, and there's almost no competition up there.
18. Re:IBM is dying by alexander_686 · 2014-09-29 06:41 · Score: 2
  
  "Hollowing Out" is a valid concern, but let me make an argument on being "stuck in the middle".
  One can either thrive by either being a low cost provided or by differentiation. If you go the low cost route, you squeeze every penny out of production and thus tend to offer generic products. If you go the differentiation route you get to charge premium prices but you also have to offer more expensive custom products. Wal-Mart or Sacks. Companies that try to do both tend to failure miserable at both.
  http://en.wikipedia.org/wiki/P...
  As an aside, I once worked in an upscale subsidiary in a mass market company. Everybody was miserable. The subsidiary did much better when it was spun out of the parent company.
  Which takes us back to IBM. What core skills are they losing? They are still making servers, so not those skill sets. What they are losing are the mass manufacturing / distribution skills, which I count as a modest loss.
19. Re:IBM is dying by brxndxn · 2014-09-29 08:25 · Score: 1
  
  Both IBM and Oracle are introducing the latest and greatest in truly non-migratable legacy software. IBM and Oracle are both neck and neck in developing the largest locked-in IT budget footprint and most proprietary upgrade path. We'll see who wins this eventually - but right now, it's nice to see that the cost per user has never been higher. It's an exciting time to be in the last best thing!
  
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Time will tell... by Last_Available_Usern · 2014-09-29 02:36 · Score: 2

Lenovo has made their money selling very cheap equipment with very small margins in very large quantities. I'm really not sure how well this will translate into a market where buyers like you or me apply a lot more discretion to our choices. They are going to have to come out of the gate with excellent hardware and likely take a loss just to prove their merit.
Minecraft? by jeremiahstanley · 2014-09-29 02:43 · Score: 5, Insightful

Seems like this was a real deal considering Microsoft just paid MORE for Mojang.

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Le-no-no by Brewmeister_Z · 2014-09-29 03:18 · Score: 2

They should sell out to the French so the name works as this is more relevant to the business model. We had a vendor trying to get us to go with their desktops. We are now stuck with 3 of them in our network. They use weird proprietary parts such as a goofy non-standard ATX power supplies that run the power connectors for SATA off of the motherboard boards. Proprietary garbage. These servers will prove to be even more of that BS.

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Time will tell... by Anonymous Coward · 2014-09-29 03:38 · Score: 0

Lenovo has made their money selling very cheap equipment with very small margins in very large quantities. I'm really not sure how well this will translate into a market where buyers like you or me apply a lot more discretion to our choices. They are going to have to come out of the gate with excellent hardware and likely take a loss just to prove their merit.
They have also lowered defect rate and warranty claim rate on the nicer quality stuff, such as enterprise ThinkPad products. Through rosy glasses I like to think of this side of their business when I picture them taking over the x86 server line.
Fun Question by brunes69 · 2014-09-29 03:59 · Score: 1

Fun question - who would you rather have spying on you? The NSA or the Chinese?
Personally I would rather have the Chinese spy on me because I never go there, and am not too worried about them shipping me off to prison on trumped up chargers because I disagree with whatever government is in power. The NSA on the other hand....
1. Re:Fun Question by TechyImmigrant · 2014-09-29 06:36 · Score: 1
  
  I'm screwed. I live in one and travel to the other on a fairly regular basis.
  
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2. Re:Fun Question by Jawnn · 2014-09-29 06:38 · Score: 1
  
  Fun question - who would you rather have spying on you? The NSA or the Chinese?
  Personally I would rather have the Chinese spy on me because I never go there, and am not too worried about them shipping me off to prison on trumped up chargers because I disagree with whatever government is in power. The NSA on the other hand....
  You've neglected an obvious problem. All that "useless" information on the decadent Americans is highly marketable. The NSA would gladly pay the Chinese to have a look at it.
Brings new meaning to the phrase by n6kuy · 2014-09-29 04:02 · Score: 4, Funny

"Nobody ever got fired for buying IBM."

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Competition need not be apples to apples... by Junta · 2014-09-29 07:43 · Score: 1

The 'topmost tiers' are threatened by other tiers, even when they are not direct replacements. Workload might not have another viable closed-source DB or Unix player or Mainframe platform to move to, but many of those workloads are moving out of those tiers entirely instead. On the flip side, you don't see a lot of workload living happily outside of IBM's wheelhouse eager to jump in. The signs all suggest that IBM's most believable favorable outcome is slowing the erosion rather than capturing a lot of new growth. This wouldn't be such a terrible thing, except that their business leaders and shareholders think that no growth == dead and act accordingly.

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burning living room furniture by Eravnrekaree · 2014-09-29 10:41 · Score: 1

This is burning the living room furniture. Running the server and personal computer business is profitable for Lenovo, IBM could have itself made it profitable as well if it was so inclined. Whats left of IBM? A few aging mainframe platforms that are on decline and serve an increasingly small niche market
1. Re:burning living room furniture by iggymanz · 2014-09-29 11:20 · Score: 1
  
  Wrong, no big profits in commodity crap, x86 servers have been a problem in IBM financials.
2. Re:burning living room furniture by Eravnrekaree · 2014-09-29 15:52 · Score: 1
  
  then why would lenovo want to spend so much money on something that is worthless?
3. Re:burning living room furniture by iggymanz · 2014-10-03 12:25 · Score: 0
  
  for the same reason your local dollar store has crappy chinese tools for $1 each