updated 12:36 pm EST, Thu January 23, 2014
Approximately 7,500 IBM employees to transfer to Lenovo
Chinese notebook producer Lenovo is taking on IBM's x86 server business, with the $2.3 billion deal funded by $2 billion in cash and the remainder in Lenovo stock, the company has confirmed. Though not a customer-facing purchase, the acquisition of the server line represents a second major transfer from IBM to Lenovo, following the sale of IBM's PC business and Thinkpad line to the company in 2005.
As part of the purchase, Lenovo gains IBM's System x, BladeCenter and Flex System blade servers and switches, x86-based Flex integrated systems, NeXtScale and iDataPlex servers with associated software, blade networking, and IBM's maintenance operations. IBM doesn't lose all of its server business, as it retains its System z mainframes, Power Systems, Storage Systems, Power-based Flex servers, and PureApplication and PureData appliances.
Lenovo will also assume customer service duties for existing customers once the transaction is completed, with IBM providing maintenance delivery on Lenovo's behalf for a period of time afterward. The two will also enter a strategic relationship involving a global OEM and reseller agreement for IBM's various entry and mid-range data storage systems, as well as parts of IBM's system software portfolio. Approximately 7,500 IBM employees globally will be offered employment at Lenovo at the same time.
Yang Yuanqing, chairman and CEO of Lenovo, said "With the right strategy, great execution, continued innovation, and a clear commitment to the x86 industry, we are confident that we can grow this business successfully for the long-term, just as we have done with our worldwide PC business." Recent Gartner figures put IBM in second place in terms of worldwide server shipments for the third quarter of 2013, with a 22.9-percent market share behind HP, but the number of shipments themselves dropped by 18.9 percent compared to the same period in 2012.
Aside from the parts of the server business it is keeping, IBM will continue its work on its larger data management projects, with a $1 billion investment in its IBM Watson Group and $1.2 billion into expanding its global cloud computing footprint also slated.