Lenovo Acquisition of IBM's x86 Server Business Closing October 1by Jarred Walton on September 29, 2014 6:25 PM EST
- Posted in
- IT Computing
Lenovo announced today that they have satisfied the conditions needed to complete the acquisition of IBM's x86 server business, and the parties expect to finalize the deal and close effective October 1, 2014. This move also basically marks IBM's exit from the x86 market, after having previously sold off their PC laptop and desktop division to Lenovo back in 2005. The details of the acquisition were first announced in January 2014, with the purchase price being approximately $2.1 billion ($1.8 billion in cash and another $280 million in Lenovo stock).
Getting into the details, as part of this acquisition Lenovo will get the System x, BladeCenter, and Flex System blade servers and switches, x86-based Flex integrated systems, NeXtScale and iDataPlex servers and software, and additional blade networking and maintenance operations. IBM for their part will maintain their System z mainframes, Power Systems, Storage Systems, Power-based Flex servers, and PureApplication and PureData appliances. IBM will continue to provide service and maintenance for an extended period of time, to help ensure a seamless transition for customers.
Interestingly, the announcement bears an uncanny resemblance to the news from nearly a decade ago, as this will make Lenovo the third-largest player in the global x86 server market. When Lenovo bought IBM's PC division, they became the third-largest player in the PC laptop and desktop space. Of note is that last year, Lenovo was the largest PC vendor by unit sales, so clearly they're hoping for a repeat of that success, only this time in the more lucrative server space.
Gerry Smith, Lenovo Group VP of and president of Enterprise Business Group and America's Group states, "The acquisition is a clear demonstration of the confidence we have earned based on our consistent track record as a responsible global investor and as a secure and reliable technology provider. Lenovo has big plans for the enterprise market. Over time, we will compete vigorously across every sector, using our manufacturing scale and operational excellence to repeat the success we have had with PCs."
Post Your CommentPlease log in or sign up to comment.
View All Comments
tipoo - Monday, September 29, 2014 - linkThink they'll eventually stop making Power and PowerPC processors? Seems like they're moving to all services and software. I wonder if things like the Power8 are worth the investment now?
Noëlius - Monday, September 29, 2014 - linkThere is currently nothing like pSeries on the market. It is a very niche product, but it's power, scalability, and hardware cannot be overstated! It is an incredible product line that, eventhough it will fully adopt Linux, AIX is unbelievably entrenched in its hardware virtualization use.
I had never been exposed much to these machines prior to my current job. Now that I have gained hands on experience with them, I have much greater appreciation for them!
Otherwise, I'm glad to see Lenovo pickup the product line mentioned above. I think they will offer greater value, as their desktops and laptops lineups have never been better!
tipoo - Tuesday, September 30, 2014 - linkI've worked with them a tad too and did some mainframe programming in school, but I'm wondering if it's worth it for them financially for a small market.
Noëlius - Tuesday, September 30, 2014 - linkYes it is worth it for them. There is nothing on the market today that even comes close to what these things do.
I'll give you a hint - Do you recall when VMware first came out? It actually allowed you to virtualize YOUR PC's hardware. The virtualization was a direct snapshot of your PC. You could then prep your Window 95/98 installation with drivers for that exoctic SCSI controller for you CDROM and HDat boot time, restructure the layout of boot partitions, test it, Ghost it, then in case your PC would BSOD and wipe out important system areas you could recover easily. Anyhow, this is becoming a rant.
pSeries + AIX = same concept. You hardware and logical components are bound at the lowest possible level. Each core can support an LPAR (which is basically a computer-inside-a-computer), so your $50k 16 core p7 Series server actually can run 16 LPARs. If you decide on the p8 16 core, you can run 32 LPARs. Not to mention the 2 Expansion drawers you can connect to a p740 (or above) that provides you with 4 low profile slots and 6 full height slots on the main server, + 20 full height slots per expansion drawer, that's a total of 50 slots to for either Quad Etherchannel or Fiberchannel HBAs!
No, there is just nothing like these. Nothing.
tipoo - Tuesday, September 30, 2014 - linkYou're still confusing "are they good" with "are they worth it for IBM", I have no doubt they are great systems, but like Vaio PCs good doesn't mean money making. Someone else explained it to me though, even with not a bunch of revenue from hardware, that hardware locks others into software which is the big money maker for them.
Noëlius - Tuesday, September 30, 2014 - linkYes, it is worth for IBM. Because there is nothing like this on the market - THEY OWN that vertical! It locks companies into a huge licensing and support.
Duraz0rz - Monday, September 29, 2014 - linkNope, their PowerPC mainframes are still the best out there.
TiGr1982 - Tuesday, September 30, 2014 - linkThere are no "PowerPC mainframes"; there are POWER systems (POWER8 now); "POWER" and "PowerPC" are very different things. Should not be confused with each other.
tipoo - Tuesday, September 30, 2014 - linkThe best, but are they worth it for them financially? Thats what I'm wondering.
errorr - Monday, September 29, 2014 - linkHard to say but it still drives massive R&D spend and has big big margins.
IBM revenue was 7% hardware and related maintenance services last year. Most of that was the power stuff anyways and still it was down 33%.
The x86 business was an insignificant part of the company and even the Power stuff is a very minor part.
IBM revenue is almost 50/50 integrator/consulting or software licenses for the other $94 Billion. Websphere alone is close to a $20b dollar business.
A large part of IBM development and R&D goes to software enabled hardware.
Hardware cost seems insignificant when a $10,000 server means $100,000 in licenses ($70,000 p/y maintenance).
Of course put GBS and software group in a room together and I can assure you with a little alcohol a fight will break out so it is often like 2 separate companies in one.