IBM sells low-end x86 server biz to Lenovo for $2.3 billion

Enterprise IT vendor IBM has sold its low-end x86 server business to Lenovo for $2.3 billion.

IBM will retain its System z mainframes, Power Systems, Storage Systems, Power-based Flex servers, and PureApplication and PureData appliances.

IBM will receive $2.07 billion in cash and the rest in shares for the x86 business.

Dell was in the race to buy the low-end server business.

The decision to buy low-end server business is expected to assist Lenovo to diversify away from the slumping PC-sales sector.

IBM in the recent quarter posted less impressive financial performance. IBM’s profit in 2013 dipped 1 percent to $16.5 billion compared with $16.6 billion in the prior year. Revenues decreased 5 percent to $99.8 billion compared with $104.5 billion in 2012.

IBM’s x86 server business includes 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.

In 2005, Lenovo acquired IBM’s PC business, which included the ThinkPad line of PCs.

IBM will continue to develop and evolve its Windows and Linux software portfolio for the x86 platform.

IBM sells x86 server business to Lenovo for $2.3 billion

Lenovo and IBM will have OEM and reseller agreement for sales of IBM’s entry and midrange Storwize disk storage systems, tape storage systems, General Parallel File System software, SmartCloud Entry offering, and elements of IBM’s system software portfolio, including Systems Director and Platform Computing solutions.

IBM will transfer approximately 7,500 employees around the world, including those based at major locations such as Raleigh, Shanghai, Shenzhen and Taipei, to Lenovo.

Recently, IBM announced $1 billion investment in the new IBM Watson Group, and $1.2 billion to expand its global cloud computing footprint to 40 data centers worldwide in 15 countries across five continents.

Yang Yuanqing, chairman and CEO, Lenovo, said: “With the right strategy and great execution, we can grow this business successfully for the long-term.”

IBM will focus more on areas such as cognitive computing, Big Data and cloud.

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