As sharks circle, IBM prepares its x86 exit
- 19 August, 2014 06:13
Once IBM completes its x86 server line sale to Lenovo, the latter will immediately take a solid third place ranking in worldwide revenues in the market.
Today, according to IDC data, Hewlett-Packard leads with 29.6 per cent of the revenue generated in the worldwide x86 server market. Dell is in second place at 22 per cent and IBM in third at 11 per cent. Lenovo is currently in the single digits.
IBM said Friday that the U.S. Committee on Foreign Investment had cleared the US$2.3 billion sale of its x86 business to Lenovo. The purchase agreement was announced early this year, and the global transition has been underway since then.
What's left are formalities.
IBM's website states that "System x is now a Lenovo product." The parties could close this deal in the US as early as this month.
This move affects about 7500 IBM employees worldwide, which IBM has said would be offered jobs with Lenovo. Adalio Sanchez, the general manager of its System x line, which includes its blades, is expected to continue in that post with Lenovo.
Meanwhile, Lenovo-IBM rivals are trying to pull IBM x86 customers away. Hewlett-Packard has put a message on its homepage: "Server vendor planning its exit strategy?"
Dell has its own campaign, including offering an online course for its partners on the "competitive talking points that may help you take advantage of this opportunity and drive more Dell server sales."
"There is always an opportunity and there is always a threat for both sides," said Jed Scaramella, an analyst at IDC. The rivals, "view it correctly as a short-term opportunity to grab some customers."
But Scaramella said that Lenovo bought the entire business unit, "which we thought was a really good move." Top managers, including Sanchez, as well as employees in sales, development and marketing are moving to Lenovo, an effort by it and IBM to keep the operations as consistent as possible, he said.
"They are picking not just the technology, but they are picking up the staff as well," said Scaramella. The goal "is to make the transition seamless for all IBM System x customers," he said.
The other key part is that business unit is landing with a company that cares about hardware, said Scaramella. IBM, for its part, "has been moving upstream," focusing more on software, services and cloud, he said.
The prior connections between the two companies will ease the transition, said Charles King, an analyst at Pund-IT. During the sale of IBM's PC division to Lenovo there were claims that the company would fumble and hurt the ThinkPad PC line.
"The contrary has actually been the case," said King.
IBM sold its PC division to Lenovo in 2005, and since then Lenovo has become the largest global seller by shipments of PCs.