IBM reportedly renews effort to offload low-end server business

By on January 20, 2014, 10:30 AM
lenovo, dell, ibm, servers

We reported last year about IBM's plans to sell off its low-end server business, and big blue's negotiations with Chinese company Lenovo in connection with a potential acquisition. But the deal did not materialize due to price disagreements. Lenovo valued the operation at below $2.5 billion while IBM was seeking between $5 billion and $6 billion for the business.

According to a new report from The Wall Street Journal, IBM is reviving its effort to offload the server business, and Dell is one party looking at a potential deal.

Due to advancements in processing power and the rise of cloud computing, low-end servers are no longer a high-margin business for IBM, which is the main reason why the company is planning to sell it off. Over the last decade, the IBM has gradually shifted focus from low-margin businesses like PCs -- a division sold to Lenovo -- to software and services, an area where its expertise guarantees better profits.

On the other hand, Dell, which is shifting its focus toward corporate clients, is looking to diversify its business so that it can reduce its reliance on personal computer sales. At present, it is not clear which other parties are interested, and whether Lenovo is still sniffing around.

User Comments: 2

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JC713 JC713 said:

Their server division is faltering. This doesnt surprise me.

9Nails, TechSpot Paladin, said:

I was surprised to learn that IBM even offered low-cost / low-end servers. I've always turned to Dell or especially HP for servers like that. But now that Cisco's in that space it's a pretty crowded market. And frankly I don't know what IBM offers well enough to draw comparisons between their competitors. for "pizza box servers", I'm primarily an HP server shop and Dell, at one time, was kind enough to loan a server to me permanently for evaluation. But lately my focus has been on blade products.

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