IBM’s Low-end Server Business Acquired For $2.3 Billion

IBM’s Low-end Server Business Acquired For $2.3 Billion

IBM_logo

Lenovo has finally acquired IBM’s low-end server business, after a deal spanning over a year has finally come to a close. The final acquisition price came to $2.3 billion, making it the largest tech server acquisition by a Chinese company.

IBM has been trying to shift its x86 server business for a few years now, with more companies switching to cloud computing technology from traditional server-side infrastructure. IBM is looking to invest more money in high-margin servers, which still generate impressive revenue.

Lenovo has more reason to own low-end x86 servers, given their high reputation in China, it will be easier for the company to sell their servers to Chinese companies, who are looking to nationalize their servers with the recent U.S. surveillance outbreak. Lenovo may be able to boost revenues and margins on the x86 servers if they invest heavily in China. Most Western companies are now either moving to high-end servers, their own or cloud based infrastructure, adding more benefits to the user.

IBM has been a stepping stone for Lenovo’s success before, in 2005 the Chinese company acquired IBM’s ThinkPad PC business for $1.75 billion, bolstering their position in the PC market from unknown to first place.  This is not the first time Lenovo has tried to purchase the business, last year IBM offered it out to the company for $6 billion, but Lenovo declined. In one straight year, the price has dropped by more than half, analysts believe this is due to higher grossing cloud computing firms and more companies looking to newer and faster technologies.

Hewlett Packard is currently the major player in the x86 server business with IBM second, although their position may drop due to this large scale acquisition. Lenovo is currently not in the top five, but given the amount they are prepared to invest, we could see a repeat of the PC market battle.

Analysts predict the x86 servers bring in around $4 billion in revenue annually. As the PC market dwindles, Lenovo is looking to invest more in back-end technology and mobile, making sure they have their backs covered when the PC dies.

By Walter Bailey

About Walter

Walter has been a technology freelance writer for several years. His focus is on Cloud Computing and Big Data.

View All Articles

Sorry, comments are closed for this post.

Cloud Computing – Know How To PaaS

Cloud Computing – Know How To PaaS

Know How To PaaS The future of enterprise IT is cloud, and the future of cloud is PaaS. Infrastructure is metal, plastic, and silicon. It has kinetic potential, but sits and waits to be animated. Software is ethereal – dynamic, wildly alive, and transformative. Without PaaS, the twain shall never meet. No animation, no dynamism,…

Digital Transformation: Miracle and Wonder

Digital Transformation: Miracle and Wonder

Digital Transformation These are the days of miracle and wonder. I’ve been leading a small, global research team at the Tau Institute for the past few years to examine the dynamics of IT adoption in more than 100 countries throughout the world. We’ve developed several indices that show how well these nations are doing on a relative basis. We ranked the nations…

Cloud Email Marketing Services vs. Transactional Email Services

Cloud Email Marketing Services vs. Transactional Email Services

Cloud Based Email Marketing Services Every business can benefit from successful implementation of email marketing strategies, but the variety of SaaS on the market can be a little overwhelming at times. Whether you’re interested in learning more about email marketing or hoping to clear up any confusion surrounding transactional email, a little research into these…

Cloud Computing – A Requirement For Greater Innovation

Cloud Computing – A Requirement For Greater Innovation

Cloud Computing Innovation Sao Paulo, Brazil has had trouble with both energy and water supplies as of late. Despite it is the rainy period. Unfortunately Sao Paulo is very dependent on its rain as a majority of its power is generated from large dams. No water, no energy. Difficult situation for a city of some…

Insider Threats and Sensitive Data in the Cloud

Insider Threats and Sensitive Data in the Cloud

The Age of Sensitive Data in the Cloud A recent survey report conducted by the Cloud Security Alliance (CSA) revealed that cloud security had reached a tipping point: 64.9% of respondents (which included IT security professionals from enterprises across all industries and regions) believed that the cloud was as secure or more secure than their…

Medical Professionals Face Unique Challenges Using The Cloud

Medical Professionals Face Unique Challenges Using The Cloud

Medical Professionals Using The Cloud The presence and value of Cloud tools have seeped into virtually every industry, and the medical profession is certainly no exception. However, because of the special rules regarding patient privacy, specifically those found in HIPAA, people handling patient information must follow specific guidelines that in many cases, are violated by…

Cloud Service Provider Selection Considerations

Cloud Service Provider Selection Considerations

Why Cloud Brokers Make Sense Different workloads perform differently on different cloud service providers. Enough so that it is prudent in planning to consider the optimal configuration and the optimal CSP for your solution. Consider this old word problem from years ago. One person can carry two buckets of water. It takes 5 minutes to…

CloudTweaks is recognized as one of the leading influencers in cloud computing, infosec, big data and the internet of things (IoT) information. Our goal is to continue to build our growing information portal by providing the best in-depth articles, interviews, event listings, whitepapers, infographics and much more.

Advertising