
IBM looks to sell its x86 server business to Lenovo as profits crash - shawndumas
http://arstechnica.com/information-technology/2013/04/ibm-looks-to-sell-its-x86-server-business-to-lenovo-as-profits-crash/
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ajross
Makes sense. In the era of cloud services IBM's traditional targets are going
to be buying far fewer servers. And you know Amazon and Rackspace aren't
buying IBM hardware. Name-brand computers are a shrinking business. This is
true across all markets. Even Apple's share is shrinking (as it continues
printing money with the devices it's selling, of course)

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vonmoltke
I would not be surprised to learn that the US Government is the largest single
purchaser of IBM hardware, directly or indirectly. Most projects I am familiar
with that use COTS machines for processing are using IBM boxes. A significant
number of those were x86 though, which leads me to believe that market isn't
enough for IBM. Of course, they were pushing POWER really hard when I left
that world.

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nnnnni
Government and schools, mostly.

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bluedino
This was bound to happen once servers all standardized on one architecture.
Not that standardization isn't a good thing, it just became a race to the
bottom just like the desktop market.

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tsotha
I'm kind of surprised, actually. There are still plenty of ways to
differentiate your product in the server space, particularly when it comes to
high availability. My company (Probably in the top 20 in the US in terms of
revenue) pays outrageous amounts of money for servers because that's what it
costs to fill your data center with DC powered high availability hardware.

I don't think we ever buy from IBM, though.

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nooneelsebut
While from a business standpoint, this is perfectly viable and a smart move on
IBM's part, in the long-term, seeing how Lenovo has ruined the Think brand, I
would be wary of spinning off any more operations to Lenovo.

They just don't have clear product focus, but in this world, I guess
shareholders rule. Even if those shareholders don't act in the best interest
of the company.

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macspoofing
>seeing how Lenovo has ruined the Think brand

Did they really?

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nooneelsebut
[http://www.lenovo.com/products/us/laptop/thinkpad/t-series/t...](http://www.lenovo.com/products/us/laptop/thinkpad/t-series/t431s/)

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w34
This actually looks like a great laptop, could some point out what's wrong
with it? The screen isn't too big and it has a nice resolution, which isn't
easy to find.

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nooneelsebut
First of all, there's no seventh row on the keyboard. Second, the Trackpoint
buttons are gone. Third, the Thinklight has been replaced with a backlit
keyboard, which is egregious as the Thinklight allowed one to illuminate
documents or other materials as well as the keyboard.

It's just like any other laptop now. And when you're used to 1440x900 (I'm on
a MacBook Air) 160 horizontal pixels is really worthless and screws up the
proportions. What ThinkPad users want, and have wanted for ages is a 16:10
display, excellent engineering, and the TrackPoint front and center.

Lenovo is squandering all of the above.

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w34
Thank you for your reply.

I've had two Thinkpads in the past (A21 and A31) before I switched to a
Macbook Pro. I don't remember the thinklight being very useful, but that may
just be me. Not sure how well the trackpad works as a mouse button.

It's a shame 16:10 has not been adopted by more laptop manufactures, it's a
great resolution. Even 4:3 may be ready for a comeback, I'd really like to see
a Chromebook in action, although I would prefer to run a more traditional
Linux operating system on it.

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xbryanx
It's interesting to see ads for this very IBM server product in the sidebar of
this article.

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nnnnni
It's just from scanning for keywords. Nothing to see here...

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jwilliams
The article quotes an analyst at the end: " _IBM's troubles are indicative of
bad news for the whole technology business_ ".

A terribly poor & overreaching conclusion. It's an odd quote to single out in
your conclusion too. The x86 server market is actually growing. What's down is
IBM's share of that _and_ more importantly the margin they're able to extract.

What is happening is that it's getting so big that it's increasingly
commoditized. People are still buying hardware.

IBM is the biggest player in the x86 server market, but their share and margin
is in decline. They still make great margins & growth on z-series.

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drorweiss
Yes, makes sense. 1\. X86 server is now commoditised. 2\. In the long run,
with cloud computing, there will be less demand for brand servers in general.

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hasker
Perhaps they want to sell the x86 business and focus on the emerging
ARM/alternative architecture business. I wonder what sort of non-compete the
deal would include.

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TallGuyShort
Being that IBM's POWER architecture is also a RISC architecture I would expect
them to rally behind that, if anything. I've heard that POWER's performance
had improved dramatically recently, so it would not surprise me if they were
trying to push POWER.

edit: Yes, I did mean 'rally' - thank you.

~~~
sciurus
I think you meant "rally".

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shawndumas
[http://www.lenovo.com/ww/lenovo/pdf/announcement/E_099220130...](http://www.lenovo.com/ww/lenovo/pdf/announcement/E_099220130419.pdf)

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erikj
So, are they still selling POWER/PowerPC servers? Would this product line be
affected?

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cones688
I don't think they would as most of the Power stuff is linked to AIX licenses
and is fairly "unique".

The offload of the x-series business is most likely due to the fact that IBM
can't compete on price with the volumes which HP & Dell shift. IBM have no
real USP on X86 as enterprise are now mostly putting ESX, Xen or Openstack on
them, IBM have no potential license or service fees generation.

It seems a sound business decision to me.

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spitfire
"We don't need the low end. Let them have it."

Didn't the american car companies take that route too? And steel mills. and...
mainframes I think.

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wisty
It doesn't make it a stupid decision. Levano can already take the low end (or
Asus will). IBM sells their low-end while it's still worth something, rather
than fighting a losing battle.

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spitfire
Then lenovo puts in a few coins into R&D and takes the market slightly up from
the low end. Which IBM gladly gives away because the margins aren't high
enough...

Then Lenovo puts a few more coins into R&D and takes the midrange. Which IBM
gladly gives up because the margins aren't high enough...

This has happened more than a few times across several industries - American
cars, Japanese electronics, mainframe/mini/microcomputers, etc.

EDIT: Also see apricot computer. Which did the /exact/ same thing - outsourced
the production of it's "commodity" computers, losing its special sauce, and
lucrative service contracts. It was gone in a flash. Sir John Harvey-Jones
even did an episode of the UK show "the troubleshooter" on them. It's a sure
way to make a quick buck this quarter, but horrible long term.

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wisty
IBM does a little to enhance their x86 line, but I don't think it's of any
great value to many customers.

If they were making a lot of revenue (not even profits!) off their value-
adding, and this value-adding could be applied to their top-end stuff (thus
amortised across a larger base), it would make sense.

I'm not an expert in IBM servers, but I don't think they are getting a lot of
revenue at the bottom-end as a result of their bells and whistles, and it's
probably not that easy to transfer those enhancements to their top-end
servers.

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yuhong
I wonder how it will affect IBM EXA.

