Lenovo Set To Close $2.1 Billion Server Deal With IBM

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.

Comments

Server Admins Everywhere are Saying...

[Anonymous Coward]

Dude, you're getting a Dell!

Re:Server Admins Everywhere are Saying...

[ArcadeMan]

Dude, you're getting Chinese spyware!

Re:Server Admins Everywhere are Saying...

[some old guy]

Which, of course, is a nice complement to the existing American spyware.

Re:Server Admins Everywhere are Saying...

[ArcadeMan]

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.

Re:Server Admins Everywhere are Saying...

[cayenne8]

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.

Re:IBM is dying

[ArcadeMan]

Are you calling them Incompetent Bullshit Managers?

Re:IBM is dying

[i kan reed]

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.

Re:IBM is dying

[mwvdlee]

Yup. a ghetto of money-printing mainframes, application servers, supercomputers and cheap sub-par IT labor services.

Time will tell...

[Last_Available_Usern]

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.

Re:IBM is dying

[ArcadeMan]

They're useful for the Wisconsin Organization Of Spacemodeling Hobbyists.

Minecraft?

[jeremiahstanley]

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

Re:IBM is dying

[biptoe]

No, Inferior But Marketable.

Re:IBM is dying

[NatasRevol]

As someone whose company supports mainframes indirectly, I'd suspect both.

Re:IBM is dying

[Anonymous Coward]

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.

Le-no-no

[Brewmeister_Z]

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.

Re:IBM is dying

[alexander_686]

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.

Re:IBM is dying

[Enry]

The mainframe market is VERY lucrative.

Brings new meaning to the phrase

[n6kuy]

"Nobody ever got fired for buying IBM."

Re:IBM is dying

[timeOday]

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

Re:IBM is dying

[ebno-10db]

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.

Re:IBM is dying

[alexander_686]

"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.