Last year Lenovo (News - Alert) tried to buy IBM’s low-end x86 server business for $2.5 billion, but Big Blue thought that offer was small potatoes. A year later that money doesn’t sound so bad, and in fact Lenovo has now officially struck a deal to buy the exact same business for a just a smidge less, $2.3 billion is the new number.
While it sounds like Lenovo may have struck a bargain, the IBM (News 
- Alert) business is worth far less than it was a year ago. Rather than growing like a good business should, Big Blue’s commodity server sales fell 16 percent in what was a disaster of a fourth quarter. Dell (News - Alert) had previously been rumored to be interested in buying the IBM line.
Lenovo, having had great success after buying IBM’s PC line in 1995, hopes for the same with servers. In fact, Lenovo already has a strong server line in addition to PCs, laptops and workstations.
“This acquisition demonstrates our willingness to invest in businesses that can help fuel profitable growth and extend our PC Plus strategy,” said Yang Yuanqing, chairman and CEO, Lenovo. “With the right strategy, great execution, continued innovation and a clear commitment to the x86 industry, we are confident that we can grow this business successfully for the long-term, just as we have done with our worldwide PC business.”
Like the PC before it, commodity servers no longer fit IBM’s business model which is focused on higher-end software and tools, proprietary hardware such as mainframes, services and value-add.. Read More
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