IBM reportedly in talks to sell server biz to Lenovo

IBM reportedly in talks to sell server biz to Lenovo

Summary: Big Blue is seeking up to $6 billion for its x86 server business, and Lenovo is a top candidate as it does not pose a threat to other parts of IBM's business.

TOPICS: Servers, Hardware, IBM, Lenovo
The deal encompasses IBM's System x line which includes Intel and AMD-based tower, rack and blade servers.

IBM reportedly is in active discussions to sell its x86 server hardware business to Lenovo, in a deal that could be worth up to US$6 billion. 

According to a report Thursday by technology integrators publication CRN, which cited multiple sources familiar with the matter, the deal would encompass IBM's System x line which includes Intel and AMD-based tower, rack and blade servers.

IBM is seeking US$5 billion to US$6 billion for its x86 server business, revealed a high ranking industry executive tracking the deal who spoke to the publication on the condition of anonymity.

Lenovo emerged as a desirable candidate because IBM is only interested in selling its x86 server business to companies it does not view as a threat to other parts of the business, the executive said. Lenovo fits the bill because it does not have in-house storage, networking or converged infrastructure offerings, and does not have much of a footprint in the data center space.

IBM also informed employees in its 20,000 square foot serve product engineering (PE) lab that they will become Lenovo employees from June 1, a separate source told CRN. The lab is located in IBM's Building 201 facility at Research Triangle Park in North Carolina, United States.

The facility, which supports all IBM server lines including the System x, System i, System p and System z, is where hardware and software engineers re-create and solve customer problems which cannot be handled by IBM's Tier 1 to Tier 3 IBM support teams, the source added.

Big Blue has also cut staff headcount and is expected to shed some business lines as part of the overhaul outlined in its Roadmap 2015, another source told CRN. "People have been expecting some kind of selloff," said the source.

IBM will continue providing high-margin server services. After selling the System x line, it will focus on configuring, testing, installing, and managing its offerings, but not manufacturing the hardware product components, the source added.

IBM did not respond to CRN's request for comments, while a Lenovo spokesperson declined to comment citing the company's policy of not responding to rumors or speculation.

Topics: Servers, Hardware, IBM, Lenovo

Ellyne Phneah

About Ellyne Phneah

Elly grew up on the adrenaline of crime fiction and it spurred her interest in cybercrime, privacy and the terror on the dark side of IT. At ZDNet Asia, she has made it her mission to warn readers of upcoming security threats, while also covering other tech issues.

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  • IBM reportedly in talks to sell server biz to Lenovo

    lenovo is very good in buying companies that adds to its bottom line. they do not need to spend a single dollar on r&d and they have a ready market with a healthy share to boot, in addition to the intellectual propery that comes with the sale. reminds me of the japanese conglomerates snapping everything under the sun in their heydays. in the end it is good for the us economy, since they keep more americans gainfully employed.