IBM has entered a decision to sell its lower end server unit to Lenovo in a deal worth $2.3 billion. The decision to sell the server unit to Lenovo makes logical sense since Lenovo purchased IBM's PC division back in 2005. So, what does this leave IBM with after the deal is done?
IBM's Focus Moving Forward
IBM will retain several of its higher end server products, including System z mainframes, Power Systems, Storage Systems, Power-based Flex servers, and PureApplication and PureData appliances. These products make up the predominance of IBM's aggressive push into equipment necessary to build cloud environments. At the same time, IBM will be building off its SoftLayer acquisition by investing $1.2 billion into new data centers around the world, presumably to expand its own cloud service delivery footprint.
The deal, in context of IBM's recent transition to be a dominant software and services player, makes a lot of sense. By removing a lower end and underperforming "low end" server business unit, the company can now focus on higher end "cloud enabling" server products and its own cloud infrastructure services. No doubt, IBM believes these two product & service lines will yield far higher margins that their commoditized PC and low end servers.
