Data Security

Lenovo, Back for More, Buys IBM's x86 Server Business

Lenovo, Back for More, Buys IBM
January 23, 2014 10:48AM

Bookmark and Share
The purchase of IBM's x86 server business shows Lenovo is willing "to invest in businesses that can help fuel profitable growth and extend our PC Plus strategy," said Lenovo Chairman and CEO Yang Yuanqing. That strategy seeks to make China-based Lenovo the largest maker of any kind of computer, not just PCs.

Neustar, Inc. (NYSE: NSR) is a trusted, neutral provider of real-time information and analysis to the Internet, telecommunications, information services, financial services, retail, media and advertising sectors. Neustar applies its advanced, secure technologies in location, identification, and evaluation to help its customers promote and protect their businesses. More information is available at www.neustar.biz.

Having had great success with its purchase of IBM's PC business, Lenovo has now returned for more. On Thursday, the company announced it has entered into an agreement to buy IBM's x86 server business.

The x86 purchase includes System x, BladeCenter and Flex System blade servers and switches, as well as x86-based Flex integrated systems, NeXtScale and iDataPlex servers and associated software, blade networking and maintenance operations. The price is about $2.3 billion, with $2 billion in cash and the rest in Lenovo stock.

According to The New York Times, negotiations began early in 2013 and IBM initially wanted $4 billion. Dell and Fujitsu were also interested in the division, but, since Lenovo began analyzing the purchase a year ago, it was able to more quickly offer an acceptable bid.

Strategic Relationship

During the transition, IBM will continue with maintenance for an unspecified period of time, so the changeover will not affect customers.

IBM will keep System z mainframes, Power Systems, Storage Systems, Power-based Flex servers, and PureApplication/PureData appliances. The two companies will also engage in a strategic relationship that includes global OEM and reseller agreements for a variety of IBM products, including entry and midrange Storwize disk storage systems, tape storage systems, and some components of IBM software, such as Systems Director and Platform Computing solutions.

The purchased business currently employs 7,400 IBM workers globally, and the two companies said Lenovo expects to offer jobs to all of them.

Lenovo Chairman and CEO Yang Yuanqing said in statement that the purchase shows the company is willing "to invest in businesses that can help fuel profitable growth and extend our PC Plus strategy." That strategy seeks to make Lenovo the largest maker of any kind of computer, not just PCs. He expressed confidence that Lenovo could grow this x86 server business, "just as we have done with our worldwide PC business." In 2005, Lenovo bought IBM's PC division for $1.75 billion.

'A Diminishing Business'

For its part, IBM Senior Vice President and Group Executive Steve Mills told news media that the divestiture allows his company "to focus on system and software innovations," including cognitive computing, Big Data and the cloud. IBM recently announced it was investing more than $1 billion in the new IBM Watson Group, plus $1.2 billion to expand its global cloud computing data centers.

Roger Kay, an analyst with Endpoint Technologies Associates, told us that "IBM is leaving commodity hardware," focusing on higher-end hardware and, especially, software and professional services.

He said IBM "has handed Lenovo a diminishing business, and Lenovo has made the pitch that it is good" at competing in commodity computing products. Lenovo is currently the world's largest PC maker. In theory, Kay added, "this is a win-win for both companies."

Two of Lenovo's biggest competitors -- HP and Dell -- "have both PCs and servers," he pointed out, so this purchase "fills out Lenovo's line." As the PC business continues its slump, Lenovo has also expanded into tablets and smartphones.

Tell Us What You Think
Comment:

Name:



 Data Security
1. Juniper DDoS for High-IQ Networks
2. Google Hacker Team to Hunt Bugs
3. Cloud Firms Offer Azure Starter Kit
4. FBI Cyber-Expert's Humble Start
5. Chinese Hackers Hit U.S. Officials




 Most Popular Articles
1. Experts Say Four Threats Put Internet Freedom at Risk
2. Gartner Rates Security Solutions in Annual Magic Quadrant Report
3. Google I/O Conference Brings a Lot for Businesses
4. IBM Earmarks $3B for Next-Gen Cloud Computing Chips
5. Focus on Security in New Dell Products, Upgrades

Have an informed opinion on this story?
Send a Letter to the Editor.
We want to know what you think.
Send us your Feedback.

 Related Topics  Latest News & Special Reports

  Juniper DDoS for High-IQ Networks
  Seagate Unveils Networked Drives
  Google Hacker Team to Hunt Bugs
  Cloud Firms Offer Azure Starter Kit
  FBI Cyber-Expert's Humble Start

 Technology Marketplace
Big Data
Unlock your enterprise data's potential. Learn how in the research report.
Are you getting everything you can out of your business data?
 
Business Intelligence
Get real-time, cloud-based information services with Neustar.
 
CIO Issues
Secure and retain skilled technology professionals. Learn how.
 
Cloud Computing
Are you getting everything you can out of your business data?
 
Data Storage
Unlock your enterprise data's potential. Learn how in the research report.
 
Enterprise Hardware
Protect your network with APC Smart-UPS battery backup
Cisco UCS Invicta Series flash memory systems
 
Enterprise I.T.
Register for an upcoming ISACA® certification exam today
Secure and retain skilled technology professionals. Learn how.
 
Enterprise Software
Unlock your enterprise data's potential. Learn how in the research report.
 
Hardware
Protect your network with APC Smart-UPS battery backup
Ferocious productivity. A fearless team of pros. Find Out More
Cisco UCS Invicta Series flash memory systems
 
Network Security
Protect your network with APC Smart-UPS battery backup
 
Small Business
Ferocious productivity. A fearless team of pros. Find Out More