Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

IBM looks to sell its x86 server business to Lenovo as profits crash

arstechnica.com

Post reply on HN
Print view View original

41–45 of 45 posts

Re: IBM looks to sell its x86 server business to Lenovo as profits crash

#41

Post by spitfire »

wisty wrote: post #22
spitfire wrote: post #12

Earlier quoted context omitted.

"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.

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.

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.

Re: IBM looks to sell its x86 server business to Lenovo as profits crash

#42

Post by wisty »

spitfire wrote: post #41
wisty wrote: post #22

Earlier quoted context omitted.

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.

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/mic…

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.

Re: IBM looks to sell its x86 server business to Lenovo as profits crash

#43

Post by zmonkeyz »

spitfire wrote: post #12
cones688 wrote: post #11

Earlier quoted context omitted.

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 busines…

"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.

and Apple...

Re: IBM looks to sell its x86 server business to Lenovo as profits crash

#44

Post by 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.

Re: IBM looks to sell its x86 server business to Lenovo as profits crash

#45

Post by thereallurch »

andrewflnr wrote: post #35
thereallurch wrote: post #19

Earlier quoted context omitted.

Why would POWER be affected by this decision? Everyone and their mother sells a x86 server. Hard to make a profit when everyone is competing. How many other companies sell POWER hardware?

How many companies buy POWER hardware?

Quite a few. It puts food on my table.... :)
Post reply on HN