U.S. Approves IBM/Lenovo Sale

MartinB writes with the "Committee on Foreign Investment in the United States (CFIUS) review result: unanimous approval for the sale to go ahead, with no further external approvals needed. No compromises were required over the location of Lenovo facilities in sensitive research areas, nor were limits put on Lenovo's ability to sell PCs to U.S. agencies."

PowerPCs here we come

[Anonymous Coward]

The x86 is done.

Re:Go ahead America

[Anonymous Coward]

As I understand it, this sale is more of a few-years lease.

Surprised

[northcat]

I'm surprised that they even thought of stopping the deal. I've always viewed USA as a country that tries very hard to support businesses.

IBM Hardware

[Anonymous Coward]

What will become of the beloved Thinkpads? Will Lenovo continue to maintain the same level of quality that IBM has?

More interestingly, I'd be interested to see if IBM started producing affordable powerpc laptops and desktops running Linux. It seems Microsoft can no longer wield the Windows tax against IBM.

What does IBM know that we don't?

[Locke2005]

Does this deal leave IBM free to persue building a new PC based on Cell Processor and/or PowerPC technology, instead of the increasingly less efficient x86? If so, selling off the trailing edge x86 business would just be a smart business move, wouldn't it?

Re:IBM Hardware

[Anonymous Coward]

With the XBox 2 using a form of windows on powerpc, that may not be tur for long. If powerpc does start to gain significant marketshare, don't doubt that Microsoft wouldn't port a version of windows to it again, like with NT 4.0.

Windows is done

[w42w42]

Windows isn't really done, but this was my thought when IBM put their pc business up for sale. Back in the day, it was this group because of pressure from Microsoft that would put up internal ibm roadblocks to their own OS/2. I imagine they initially weren't that friendly to Linux, either. Dumping this low-margin business though has the added benefit of letting IBM focus on their hardware and services. If IBM wants to sell Linux, OS/400, Windows, etc, there's not much msft can do about it legally or otherwise now.

PCs

[d3matt]

So IBM developed the PC and brought the current rendition to market. Fortunately for us and for all PC users they allowed their designs to be copied (clones anyone) thus putting apple forever in the dark. Since they did this, market forces have determined that IBM should no longer be in the PC business. Frankly, who cares? There are thousdands of other businesses that makes PCs now. The only reason I would care is if Lenovo gets the IP that encompasses the PC they may try to charge royalties for anyone using their IP to make a producat (go frivalous patents!).

Microsoft agreement gone?

[chiph]

So, does this mean that IBM is finally out from under the Microsoft joint-development agreement, that dates back to the days of the original PC and PC-XT?

Chip H.

Re:What does IBM know that we don't?

[bhtooefr]

Hmm... are you thinking a really cheap version of this? [ibm.com]

1-way SMP with 1.0GHz or 1 or 2-way 1.45GHz POWER4+ microprocessor
1.5MB L2 and 8MB ECC L3 cache
Up to 16GB of ECC SDRAM memory with Chipkill
Up to 4 Ultra320 SCSI hot-swap 10K or 15K RPM disk drives
Six PCI-X adapter slots
Gigabit Ethernet and 10/100 Ethernet standard
Select from 2D and 3D graphics accelerators
IBM's CATIA V4 performance leader.

Re:I blame Bush

[shanen]

All this deal does is put money in the fatcat's pockets. It has nothing to do with sound business decisions. Karl Rove probably penned the deal.

While that's true of a lot of deals, I don't think it's the big motivation in this specific case, and IBM is a relatively non-political company. Lots of metrics, though the obvious one is political donations--and to the best of my knowledge IBM does not donate to political parties or encourage employees in any way to donate. (I don't think it matters which way the big money goes--it is fundamentally harmful to the political system, and whichever side gets it, it produces a kind of political "arms race" as the other side tries to catch up. For example, Teddy Roosevelt and Ike were both strongly against political donations from companies.)

However, I also disagree that share price should be taken as the only metric of company success. Any single metric that becomes too dominant will imbalance things and have ultimately negative consequences. In this specific case, I think it's part of the general hollowing out of American industry and strengthening of Chinese industry--which mostly reminds me of what happened in America before the Civil War. The South became a militarily-strong, industrially-weak debtor.

From the more narrow perspective of IBM, my main concern is that this deal could weaken IBM's "empathy" for customers in lower-margin businesses. Unfortunately, the way the numbers work, most companies are average or below by any specific metric, which in this case means that most of IBM's corporate customers are involved in relatively low-margin businesses. IBM won't share that situation with them after this.

One more thing in the "other values" category. For example, one of IBM's other non-share-price values is "supporting diversity" by deliberately hiring many kinds of people. Well, I think that "supporting commodity computers" is also a value that was worth supporting and something that benefits a lot of people, even if the profits are slim. However, in IBM's specific case, all of the high-margin businesses depend on computers, so there's a strong and direct benefit from that support...

global goggles

[Doc Ruby]

The IBM/Lenovo sale is IBM's strategy to sell past China's protectionist trade barriers. It's gotten wide support because it's probably unique in requiring the Chinese company to move some operations to the US, to allow IBM to use them to reach the Chinese market with the rest of their products and services. It's kind of odd how your pro-globalism post bashes people suspicious of IBM sending essential industry to China, but doesn't complain about those Chinese protectionist barriers. Is your "globalism" really just a cover for a culture war you prefer to actual free global trade?

Re:No biggie...

[StillNeedMoreCoffee]

I beg your pardon. These pc's come with code. That code will be created and loaded by another country that certainly mixes more politics and business than we do, well that seems to be changing.

What could happen. Well thousands of PC's delivered with back doors embedded. Possibly like a number of Electronic voting machines that do not disclose their source code.

We of course are economic partners with China, well maybe not on the issues of Taiwan independance or North Korean behavior or Tibet. Wasn't there a airspace incident not to many years ago. What about Tien a Min square and currently the issues with the Fa Lung Gong (well they might have a point there). China has a good face which is hard to see behind, culturally. They will do whats best for China and when the shit hits the fan which it might over Taiwan there could be a major economic price we pay. If our PC production is off shore we could have to play catch up to get back to where we are on track technologically.

So there could be a number of security issues, whats really in the boxes themselves and control over the supply of the necesarry resource.

I am surprised that the government did not think that there might be one or two issues that needed more thought here. Or is the Chinese economic stick already big enough to make us not question the possible implications of this kind of sale.

China is going to be POWERful

[TheGuano]

The word is IBM is using the Lenovo connection to get into the China market. And from the whole WAPI thing, the Chinese government might just be anti-western-dominated-standards enough to support a POWER-powered desktop on the mainland.

Not again...

[MHobbit]

I hate this, now the Chinese are digesting our good companies, and we're letting them.