Why IBM sold its PC business to Lenovo

Obviously Lenovo must have known what they were getting into when they bought IBM's PC business last month, but it's a little more clear now why IBM was so eager to sell in the first place: they were losing money like crazy. According to a recent quarterly filing with the Securities and Exchange Commission, IBM managed to lose nearly a billion dollars selling personal computers over the last 3 1/2 years. Not that we didn't think it'd been a rough past few years or anything, and at the end of the day IBM simply wasn't willing (or able, but probably just not willing) to take the steps needed to turn things around.

The interesting part about Lenovo buying IBM's PC business that hasn't gotten much attention is that Lenovo, which is based in China, is turning over much of the management of the company to a group of senior IBM execs. Amazingly, the people who run Lenovo had the humility to recognize that they simply did not have the experience to operate on a global level and decided to outsource, as the NY Times puts it, the management of the company to people who do.

[Lenny @ Dec 19th 2005 12:09AM]

So basically they're trying to turn the company profitable by assigning the same people under who it became unprofitable to do the task? Sounds like buyer's remorse is inevitable.

[msafi @ Dec 19th 2005 12:09AM]

yes it hasn't gotten much attention, although it was in the reuters news report. i, also, mentioned it in my comment on this website here:

http://www.engadget.com/entry/1234000937022988/#c70329

but why would anyone pay attention to what i say?

[daniel @ Dec 19th 2005 12:09AM]

damn, someone's feeling sorry for themselves.

[Bebop @ Dec 19th 2005 12:09AM]

Here is another view of the deal.

http://www.pbs.org/cringely/pulpit/pulpit20041209.html

[M.J. Grove @ Dec 19th 2005 12:09AM]

NO! NO! Take the technology, run like hell from the management!

[Diddie @ Dec 19th 2005 12:09AM]

"..run like hell from management"?

IBM's a mighty big organization and as often is, weighted down by its bureaucracy, however that doesn't automatically imply that IBM management is poor or lacking. Quite the contrary, my experience with IBM senior management is very good. My guess is that Lenovo calculated their risks well and decided that maintaining continuity is more important during the acquisition phase than turning it upside down over night.

My guess is that Lenovo will keep up IBM's good work and add more 'aggresiveness' to the formula to snatch some percents (and not to mention, margins) from their competitors.

Go Lenovo!

[Plinkerton @ Dec 19th 2005 12:09AM]

As long as they keep making ThinkPads on par with what they are making now, I'll be happy. I love my TP, and I don't want to have to pick something else further down the line!

PLEASE KEEP THE THINKPADS!!!

[Ed Keay-Smith @ Dec 19th 2005 12:09AM]

My wife uses an IBM notebook for her work.

I think I know why IBm is getting rid of this part of there business. There product is way behind the times in regards to quality & features from the competitors.

Good luck Lenovo.

Regards

Ed Keay-Smith
AdWords Marketing, The Google AdWords Pay-Per-Click Campaign Management Specialists.

[Plinkerton @ Dec 19th 2005 12:09AM]

I'll still take a ThinkPad over almost any other notebook in the price range, size, and features. ThinkPads just feel so much better than all the other cheap "media savvy" notebooks. I don't want to watch DVDs or all that crap. I just want a kickass notebook.

[Ming @ Dec 19th 2005 12:09AM]

I am a little doubtful and worried about the reason why Lenovo stuck with the old management team. At least, something needs to be re-adjusted to reflect a newly owned company. Of course, the continuity of the company is definately important, but again, that's also where IBM fell. Unless their analysis came back suggesting that the lose was not due to the management team...best of luck, Lenovo.

[Steven @ Dec 19th 2005 12:09AM]

TP's are great laptops, I've owned 3, my old school contracted with IBM to have them as the laptops freshmen would get. So I have a lot of experience with them, as well as with a few Dell's via my dad's company, a gateway or two that random friends have had and my current Compaq. From what I've seen:
1. stay away from Dell laptops, far far far away.
2. Gateways feel like crud, run fine.
3. I don't mind my Compaq all that much, its an "Evo" model, and the closest I've seen to the IBM TP quality in terms of build, granted its new, so we'll see what happens...
4. if you want "bullit proof", well built, well engineered and thought out, get IBM. my first one I used for 5 years before tossing it due to old age(and a broken power connector, but that was totaly my fault) and my current IBM is approaching 5 years old and runs and works like its new.

[Lenny @ Dec 19th 2005 12:09AM]

I have a Thinkpad from early '96 with Windows 95 on it. Runs just like it did the first day I bought it (although I might turn it on once every year or so).