Lenovo To Buy IBM's Server Business For $2.3 Billion

itwbennett writes "Well, that was fast. Earlier this week the rumor mill was getting revved up about a potential sale of IBM's x86 server business, with Lenovo, Dell, and Fujitsu reportedly all interested in scooping it up. On Thursday, Lenovo Group announced it has agreed to buy IBM's x86 server hardware business and related maintenance services for $2.3 billion. The deal encompasses IBM's System x, BladeCenter and Flex System blade servers and switches, x86-based Flex integrated systems, NeXtScale and iDataPlex servers and associated software, blade networking and maintenance operations. IBM will retain its System z mainframes, Power Systems, Storage Systems, Power-based Flex servers, and PureApplication and PureData appliances." SlashBI has some words from an analyst about why Lenovo wants the x86 product line more than IBM does.

$2.3 Billion

[globaljustin]

So basically Lenovo got a server manufacturer for almost $1Billion less than Snapchat is worth.

The world has gone nuts

[Anonymous Coward]

Snapchat, which makes one app, turns down 3 billion. IBM's server business sells for less.

Chinese Rule!!!

[HansKloss]

Anything left from from good 'ol USA?
Yes I forgot. Numerous 3 letter agencies, cameras, police, security forces in kindergartens, schools and grocery stores, private prisons with largest population in it.

Re:Chinese Rule!!!

[alexander_686]

IIRC Lenovo is headquartered in the US and just opened another plant for PCs in the south. I don’t want to dismiss all of the concerns but let us try to put this in perspective.

Re:Thinkpad line

[dintech]

A public consumer buying a laptop is one thing, but I can imagine certain blue chip institutions (banks for example) will be slightly less interested in buying servers from Lenovo as opposed to HP. I have some IBM servers on order right now and there isn't usually a lot in it when deciding whether HP or IBM is better for my use case. If it was Lenovo or HP, that decision would probably only go HPs way.

Great

[FuzzNugget]

Now Lenovo can fuck up that product line too, just like they did with the ThinkPad.

Re:$2.3 Billion

[CastrTroy]

When you put it that way, you start to realize how big the bubble is getting in social and other web platforms. A business that's actually taking in revenue (quit a bit, I would guess) is worth significantly less than a web service that has no way of generating revenue, and who's users can switch to a new, almost identical web service tomorrow, if they start charging money or showing ads to generate revenue. Companies like to keep their servers the same, because things (like remote hardware management ex.HP ILO) don't interoperate between different vendors. So they're going to be able to retain quite a few customers as long as they don't change anything, and just keep on producing boxes that work.

Re:ugly truth, they never stood a chance.

[Anonymous Coward]

As soon as IBM's real money makers go away, being System z and p. So, never.

Re:It Makes Sense For Lenovo

[CastrTroy]

It's not quite that bad, but unless something significant changes, I'm at the point where I buy a new PC or Laptop only when the previous one dies. And I'll only buy a new PC if the old one is unrepairable, or repairs cost more than a new one. The current computer I have is 8 years old, and still works fine for my uses. I have a newer laptop (3 years), but it was a $400 laptop, bottom of the line. Still does everything I need it to. The PC market is definitely different than 10-15 years ago when you need to buy a new machine every 2-3 years just to run the latest OS and Office software. There is nothing interesting about going out and buying a new computer, and there's very little reason to spend more than the minimum amount.

Re:Weapons grade stupidity

[sjbe]

I don't know about that...Microsoft's offer of somewhere around $50B for Yahoo comes to mind.

I agree it was a really really really dumb offer and even dumber to turn down but at least Yahoo has profits of about $1 billion/year. The valuation was stupidly high but at least you could base it on something. $3 billion for a company with zero revenues is beyond ridiculous and turning it down has to be one of the dumbest business decisions in the last 20 years.