IBM is out – or is it really?

  • PRNewswire: CHINA’S LENOVO BUYS IBM’S PC UNIT FOR $1.25 BLN BEIJINGChina’s largest personal computer maker, Lenovo Group Ltd., said on Wednesday it is buying control of IBM’s PC-making business for US$1.25 billion, capping the U.S. tech giant’s gradual withdrawal from the business it helped pioneer in 1981. The agreement, which forms the world’s third largest PC business, calls for Lenovo to pay IBM $650 million in cash, $600 million in Lenovo Group common stock and for Lenovo to assume $500 million in net balance sheet liabilities from IBM. IBM will hold an 18.9 per cent stake in Lenovo.

Yes, IBM is withdrawing from the PC market and focusing on its service industries.  However, this deal gives them a major share in the Chinese market, which is likely to be the fastest growing PC market in the world.  IBM will continue their R&D efforts and still contribute to the future of the industry.  This is a good scheme to get out the US PC market where they will have a hard time making any majors gains, and at the same time give them a stake in the future of the PC market in China.  Big Blue is anything but stupid.