Spare the Agony Over IBM Sale

By Eric Lundquist  |  Posted 2004-12-13

Spare the Agony Over IBM Sale

As I was booting up my Lenovo ThinkPad X-40, I was wondering, as many other techies have done lately, what it means for IBM to be getting out of the desktop/laptop business. After a week of speculation, IBM and the China-based Lenovo Group announced a complex $1.75 billion deal. The deal will make Lenovo a New York-based company, headed by Stephen Ward (the present head of the IBM PC business), and will create the third-largest PC company in the world. And since all you e-mailers are always quick to remind me when I mess up, Id like to remind you that it was a year ago that I suggested that Legend (now Lenovo) would be leaving its base in China for other markets.

ThinkPads are great laptops. They take a bruising, rarely crap out totally and come in form factors that are the right size and weight. I travel a lot, so the jostling my laptop sustains would justify the black screen of defeat. And two of my sons just called their 24-by-7 support line (me) to complain that their non-IBM laptops seem to be acting funny. If "funny" means a virus-laden, hard drive-grating, impossible-even-to-get-to-the-boot-screen machine, then these laptops are very funny indeed. IBM is justifiably credited with creating the corporate PC business. On a wall in my office hangs the Feb. 28, 1984, edition of PC Week, with the tag line, "The newsweekly for IBM system microcomputers."

That ThinkPad tradition will continue to exist but in a company where the personal computer is front and center rather than an auxiliary business. You dont want to wrestle with the likes of Dell (which seemed to acknowledge the Lenovo deal by sharply cutting prices again) unless you can focus completely on the market.

Click here to read how IBM CEO Sam Palmisano explained the decision to sell.

So now there is a lot of agonizing over IBMs alleged exit from the business it helped create. My advice is to spare the agony. If a Chinese company wants to get into the battle of supplying me with a laptop as inexpensively as Dell can provide and as elegantly as a company such as Apple can deliver, then I welcome it to the U.S. market. IBM, under chief Sam Palmisano, has shown a remarkable ability to put its resources where customers will find the most benefit and stockholders will find the greatest return. While the emphasis on services and middleware creates the impression that IBM cannot jettison its hardware heritage quickly enough, that simply is not true.

Next Page: Power chip more than holds it own.

Power chip

Consider the success of IBMs Power chip line. Although a lot of the interest this year has been about the restructuring at Intel as it reconsiders the wisdom of always emphasizing chip speed over other attributes, there is more to the chip business than Intel versus AMD. Apple uses the Power chip line, IBM is making a big push in China (Lenovos home turf) with Power to be the engine for Linux and the Power5 processor recently made a huge leap in performance to a secure first place in the TPC-C benchmark. For IBM, all this adds up to it realizing that the real business and strong margins in the corporate world are in the server area as well as in the middleware managing the applications on those servers. It does not add up to IBM bailing out of hardware.

While ThinkPad laptops are almost iconic in the corporate world, the desktops from IBM (quick, what is the name of IBMs desktop line?) are unknowns. The desktop world is quickly resolving into a few really big names (Dell, HP) and a big range of smaller, very focused companies. Those smaller companies have a geographical focus, such as the local white-box PC builder, or a vertical focus, such as MPC Computers (formerly Micron), which makes great boxes mostly for the government marketplace. Even IBMs marketing and financial muscle would be sorely taxed in trying to reclaim a top spot in the workstation world. By the way, the desktop-line machines are called ThinkCentres.

Is the focus on Power, selling off the desktop/laptop line and the push behind Linux and middleware, in part, payback for the decline and fall of the relationship between IBM and Microsoft over the development (or nondevelopment) of IBMs OS/2 operating system and Windows? Most would say that split is long-ago history, but Im not so sure.

Editor in Chief Eric Lundquist can be reached at

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