As usual, TPM is extensive, starting with:
IBM is selling off the System x business, presumably because it is not profitable, but also because it is something it can sell while at the same time getting approximately 7,500 employees off its payrolls. Lenovo’s Peter Hortensius, who is president of the Think Business Group that sells servers and storage into enterprise accounts, said that buying the IBM System x business accelerated its plan to become a dominant system supplier by about five years, and would actually boost Lenovo’s profits once the deal is done. After thinking about it for a bit, I reckoned that IBM can’t get economies of scale in manufacturing and, because it doesn’t have a PC business, it lost volume pricing leverage with Intel and Advanced Micro Devices the minute it sold off the PC business to Lenovo. This had to be apparent many years ago, and the wonder is what took so long. My guess? The advent of vanity-free, custom or homemade servers have taken about a quarter of the systems market, and there went the last remains of juicy profits for IBM, which, unlike Dell and HP, does not have a play here. Those cheap servers put margin pressure on everyone in the X86 server business.
Also, check out this brief overview from 451’s M&A team, including a list of past IBM divestitures.
More on the IBM x86 divestiture rationale
MSD on CNBC:
“We’re not getting in the mobile phone business,” Dell said in an interview with CNBC on Friday…. "Every time a new mobile company gets born, they need servers and infrastructure and storage,” Dell told CNBC. “Companies need to protect and secure their data on these mobile devices.“
This was a key direction for Sun as well, esp. mixed with standing up IT in so called "emerging marketings” (Schwartz always rephrased it as “growth markets”) and a whole lot about “red shift” that I never really understood not being a physicist.
One of Sun’s main issues here was the rep for being proprietary (read: not Linux+x86 – similar to the weird reaction people tend to have about zfs and Joyent, also from Solaris land – maybe Docker will induce LXC mania that will bleed back into Solaris scraping off that weird crust from people’s eyes).
While Sun got beyond Solaris eventually and started selling x86 and Linux, it was somewhat too late. Dell definitely doesn’t have that problem.
Angling to be the world’s infrastructure back-end
Buying IBM’s x86 server business is the quickest way for Lenovo to rocket up the rankings and become the number four server maker in the world, behind IBM and far behind Hewlett-Packard and Dell. The deal would make Lenovo the number three x86 server maker instantly.
—Report: IBM, Lenovo x86 server deal hits the skids