IBM's PC sale will see fireworks

The sale of IBM's PC division to a Chinese company marks a watershed moment in the tech industry. But it's not going to be an easy mesh of cultures
Written by Leader , Contributor
So the PC is finally leaving home. At 23 it's not before time.

IBM is going to sell its PC division to China-based Lenovo and take a minority stake in its former rival in a deal valued at $1.75bn. The joint venture is expected to ship around 12 million units based on 2003 numbers and have annual revenue from PC sales of $12bn.

Let's face it: IBM was never really the best parent, even if it was well-meaning. Despite its best efforts throughout the 80s and 90s to shape an adolescent PC business that would grow up to make lots of money and keep the parent company comfortable in its old age, IBM just never managed to control its offspring.

In fact, you could count IBM's PC missteps on the fingers of a moderate-sized crowd. First, it agreed to let Microsoft retain the rights for MS-DOS, and to pay the software start-up a $40 licence. This for an operating system that Microsoft had just bought outright for only about a thousand times that amount. In the process, IBM handed Microsoft a monopoly on a plate that would come back to haunt it. Having let the genie out of the bottle, IBM then spent years trying -- unsuccessfully -- to stuff it back in, with doomed initiatives such as MCA and OS/2.

But that's all history. The big story today is not so much one of IBM selling its PC division, but rather is more about a Chinese company buying a major US business. It is the first time we have seen this happen on this scale in the technology industry. It's a watershed moment.

However much sense this move makes for IBM, we do have to wonder whether its PC business will really fit in at its new home. When Michael Dell raised concerns on Tuesday about the inherent difficulties in merging two very different organisations, he was not just scoring cheap points.

Remember when Sun bought Cobalt? The fallout, which resulted in an exodus of disgruntled Cobalt employees, was tremendous - and that was a clash of cultures between two Silicon Valley companies.

We would not presume to make any judgement about the culture at Lenovo, but it's a no-brainer that the clash of cultures will be significant. Expect the fallout in the PC division to be spectacular.

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