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IBM The Almighty Buck

Chinese PC Maker Looks to Buy IBM's PC Business 238

idril writes "According to The New York Times (free registration required), China's largest PC maker is reportedly in talks to buy IBM's PC business. Lenovo, formerly known as Legend, is the leading PC maker in Asia outside Japan. Lenovo sells primarily low cost PCs; acquiring IBM's business would help them raise their brand recognition and status among more affluent, brand-conscious consumers."
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Chinese PC Maker Looks to Buy IBM's PC Business

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  • Brand Recognition? (Score:2, Interesting)

    by u-238 ( 515248 )
    Won't take for the word to get out that they've been eaten by a Chinese megacorp. And if they focus more on 'name recognition' than the quality of their computers, it will take even less time to turn this effort of theirs to prove useless.
  • I hope not (Score:4, Insightful)

    by mordors9 ( 665662 ) on Saturday December 04, 2004 @11:21AM (#10996165)
    IBM has always produced a quality product and had a pretty good reputation, especially their laptops. I can't imagine they would want to tarnish that image by selling to a low cost budget type PC company.
    • Re:I hope not (Score:3, Insightful)

      by roror ( 767312 )
      IBM laptops are made in china anyways. What difference does it make? I'd imagine the company which buys ibm pc division would try to make the most of it by retaining the quality of the laptop so that it can sell them in the same potential market. Otherwise it kinda defeats the whole purpose of buying the PC division.
      • Being made in China doesn't really mean anything either way. It could be made in a modern factory using high quality parts with stringent quality controls, or it could be made in a plant where anything goes, so long as it gets out the door. The location has nothing to do with that.

        Which one of those scenarios happens is up to the company that is having the hardware produced. IBM is definatly more the former. Their products are known to be quite high quality. If this Chinese manufacturer is all about cheap
    • Re:I hope not (Score:5, Interesting)

      by penguinbrat ( 711309 ) on Saturday December 04, 2004 @11:45AM (#10996277)
      I would be sad to see in a few years that a 5 year old ThinkPad would be worth more than a brand new one...
    • Re:I hope not (Score:2, Informative)

      by rubyfreak ( 740239 )
      Honestly, I think IBM's desktop PC segment has grown more or less pathetic over the last few years. Old hardware (took them forever to stop using TNT2 cards), ridiculous prices and embarrasingly low quality. Even the chassis, which once was one of the most robust (and heavy!) ones, are now made of weak plastics, and overall I get the feeling that IBM only keeps their PC section alive purely out of habit. Selling their PC section to some low-cost manufacturer with a genuine interest of making it profitable w
  • No reg link (Score:2, Informative)

    by Anonymous Coward
    http://www.nytimes.com/2004/12/04/business/worldbu siness/04asia.html?ex=1259816400&en=306e8426c19779 57&ei=5090&partner=rssuserland

    I am such a karma whore. O'wait, I dont even have a slashdot account. O'well.

    Enjoy.

  • If this happens it can only spell trouble for America's economy. These are the kind of jobs and businesses that need to stay in America. This is out-sourcing to the extreme.
    • by Anonymous Coward
      If America and American workers were any good at it the business would have stayed put without any problems. Clearly the companies which are outsourcing and selling their business units to other countries do not feel that America and American workers are good value for money.
      • Yeah, those worker's rights sure are a barrier to efficiency.
    • These are the kind of jobs and businesses that need to stay in America.

      See:

      http://www.thejournalnews.com/newsroom/010902/09ib m.html in America. [thejournalnews.com]

      The fact of the mater is any company can't run a business in the red indefinitly. And the date of this article suggests IBM has been bleading profits into the PC operations for some time.

      And the web never forgets...

    • IBM is selling the proverbial noose that will strangle the West. Selling out our technological base to an entity owned partially by the Chinese government is a recipe for disaster. I know it sounds alarmist, but this is a recipe for long term catastrophe.

      The US is becoming a third world country. IBM sells an entire division to China - now a Chinese firm becomes one of the top three world PC makers - and not just on cheap PCs, but near the top. Worse, IBM sells this firm its PC patents, manufacturing pr

      • by andy1307 ( 656570 ) on Saturday December 04, 2004 @12:13PM (#10996391)
        Selling out our technological base

        A lot of PCs and laptops are already assembled in Taiwan and China. Most of the parts in my PC were made in Asia. How is this a selling out of our technological base?

        • by bstarrfield ( 761726 ) on Saturday December 04, 2004 @12:34PM (#10996457)

          Specific to this case, selling both the patents that IBM holds for PC manufacturing and selling IBM's legitamacy to an external agency.

          And, to put it damn bluntly, all the parts in your PC (and my Mac laptop) made in Asia do sell out our technological base. But booyah, we've saved $100 bucks! What the hell is to stop these firms in Asia from realizing that hey, why make your machines for Dell or Apple when you can get the profit yourselves? Hey, even better, you can call it an IBM?!/p>

          We transfer technology paid for by the US government (research, infrastructure) and US consumers (far higher prices, our taxes that pay for research and infrastructure) over to foreign countries - all so the wonderful benefits of "free trade" make everyone richer. Yet free trade means nothing more than cheaper labor and looser environmental standards, never noticing that we're undermining our own way of life.

          • well. there's a limit on what's sensible and what's not.

            btw, would you rather pay 10x the prices on consumer electronics?
          • We transfer technology paid for by the US government (research, infrastructure) and US consumers (far higher prices, our taxes that pay for research and infrastructure) over to foreign countries

            The world does not owe the west, and in particular the USA, a living.

            Yes completely free trade is a Bad Thing, but your proposed alternative of attempting to keep all production/design in the United States is just not going to wash given the new econimic power of many Asian nations. Why should they accept an unequ
        • A lot of PCs and laptops are already assembled in Taiwan and China. Most of the parts in my PC were made in Asia. How is this a selling out of our technological base?

          Because the research, the design, etc., ARE done in the USA, which is a big chunk of the money, and jobs.

          Same thing goes for Intel, AMD, etc., while they may have much of their stuff made over-seas, that's all the low-margin stuff, while the high margin stuff is done in the USA.
      • Well, don't blame the executives at IBM and others who make these deals- they're obligated by law to maximize shareholder value, not to look after the economy or the country's viability. In fact, they would open themselves up to class action lawsuits if they made business decisions based on "mantaining the US technological base" or any other reason not related to the botom line.

        No, that role entrusted to the government, and the vast majority of the population only looks at "moral issues" or "gun rights" or


    • Ha! I've been rated a troll! That's too funny. Someone obviously doesn't know that definition of a troll.

  • Brand Name (Score:2, Insightful)

    by amigoro ( 761348 )
    From TFA: To what extent, and for how long, Lenovo or another buyer of I.B.M.'s PC business would be able to make use of the I.B.M. name would be a crucial question in any negotiations.

    This is going to be interesting. It wasn't long ago that all PCs were 'IBM Compatible'. Thus the brand name IBM has tremendous value. However, once IBM jettisons the PC unit, and a new company takes over it, they will surely want to hang on to the Brand name.

    Moderate this comment
    Negative: Offtopic [mithuro.com] Flamebait [mithuro.com] Troll [mithuro.com] R [mithuro.com]

    • >However, once IBM jettisons the PC unit, and a new company takes over it, they will surely want to hang on to the Brand name.

      There's no need to keep the brand name.

      They just need the ThinkPad trademark like Acer kept TI's product line it acquired in 90's (what was it - Extensa or something? Yes, it is Extensa - http://global.acer.com/about/news.asp?id=166)

      And then they can make up some more Think names (ThinkDesk for PCs, ThinkPod for portable music players and so on and so on).
  • by WhatsAProGingrass ( 726851 ) on Saturday December 04, 2004 @11:23AM (#10996174) Homepage
    PC's will be like the toys at the dollar store some day. you look on the back and it says "Made in China" and it cost only a few bucks.
  • Brand Name? (Score:3, Insightful)

    by BeerCat ( 685972 ) on Saturday December 04, 2004 @11:25AM (#10996184) Homepage
    While another firm may buy the PC business off IBM, unless the deal is pretty amazing, then they won't be able to sell them as "IBM", whuch is what some customers are looking for (not quite the "nobody ever got fired for buying IBM", but more a recognition that they still tended to be higher build quality than the no-name brands, and hence were worth the extra expense).

    However, they will presumably acquire the IBM build quality, so the trick is to be able to market the "we use the bits from the people who brought you the PC", and hope that customers adopt them.

  • Thinkpads are known for cool security devices but I think the chineese could takes this to a whole new level.

    Let's face it: The Chineese have a huge lead in fingercuff technology. American fingercuffs aren't even close! If they leverage their cuff experience in the nextgen Thinkpad they might just have the 'next big thing' on their hands.

    I heard EA has already pre-ordered!
  • End of an era (Score:5, Interesting)

    by IO ERROR ( 128968 ) <error.ioerror@us> on Saturday December 04, 2004 @11:36AM (#10996242) Homepage Journal
    IBM getting out of the PC business is a sad day for all of us. They commoditized the PC and made it possible for all of us to have cheap gaming and porn platforms right in our living rooms and bedrooms. Not to mention they built some pretty good computers. I still love my ThinkPad despite its occasional ACPI-related problems. I don't think "Lenovo" is going to be quite the same...
    • Lenovo makes pretty good computers, based on my only experience with them, the very computer I'm using now.
    • IBM didn't directly commoditize PCs. They were used as the standard by other makers and the public to make commodity PCs.
      • Yes -- Commodity PCs existed before IBM based on the old semi-standardized 8080, CP/M, and S/100 technology where PCs were almost, but not quite compatible with each other.

        The IBM Standard allowed things like disk drives, video cards, and BIOS details to be interoperable, so you could actually take a disk from one PC and use it on a PC from a different vendor. This probably would have happened anyway in the early 80s with or without IBM.

        What IBM did do is licence all of this technology pretty cheaply (~$5
    • If anyone made the PC a commodity, it was Compaq for reverse-engineering IBM's BIOS.
    • I thought it was Compaq that commoditized the PC, but IBM that made commoditization possible?
  • I would think that IBM would only sell it's PC business assets but not it's name.

    So LEgand gets a few factories, supply lines, existing customers and thats it.

  • by spidergoat2 ( 715962 ) on Saturday December 04, 2004 @11:45AM (#10996278) Journal
    Do they actually make them anywhere else? Last time I looked at my Dell, it had China stickers all over it. This would really be a good deal for Gateway though.
  • Low cost labor (Score:2, Insightful)

    The less affluent asian countries are great at stamping out billions of plastic hello kitties, I'm sure IBM is only doing it because they/it can 'make more money' at the end of the day/decade.

    Lift the cover on any old chunk of IBM hardware, you'll probably find much of it was manufactured somewhere other than America. (The rest of the world does exist by the way :-)
  • It's deja vu [slashdot.org]. Of particular interest is my post to that thread, titled leader vs follower business approach [slashdot.org]. It hasn't been mod'ed up over there, looks like I get another chance. I usually get modded up for posts I spend time on, hopefully I also will this time. Another chance; Yipee !

  • by craenor ( 623901 ) on Saturday December 04, 2004 @11:53AM (#10996308) Homepage
    IBM is a business, and no matter what we may think they owe the PC community, it's still about doing sound business.

    IBM has the largest and most profitable Services business in the Tech industry...and anyone who thinks they aren't a LOT more than just a PC manufacturer has no idea who IBM is.

    When you get down to it though, Dell has proven that theirs is the only business model that really works in the PC industry as it stands currently. IBM would be faced with the decision of spending billions of dollars to completely change their PC business to try to compete with Dell...or sell that part of their business and concentrate on things at which they excel.

    I applaud them for having the courage to move beyond this part of the tech sector and concentrate on things they do better than anyone else does, Services and Proprietary solutions.
    • Dell has proven that theirs is the only business model that really works in the PC industry as it stands currently
      while in the past this hasnt been true, these days apple's business model seems to be working pretty well (at least its gaining them back some marketshare and revenue).....
  • by amichalo ( 132545 ) on Saturday December 04, 2004 @11:57AM (#10996329)
    According to this website [computercraft.com], in 1993 IBM created a PC dividion to compete agianst mailorder companies (Gateway, Dell, et al) and called that Dividion "Ambra".

    The article states the Ambra division was miss managed and had poor customer service, leading to it's closure just one year later in 1994. The division would later be resurected as the IBM "Aptiva" line of personal computers many more of us know today.

    As a college student I was very pleased with the support I received for my Ambra (386 I believe). The monitor went bad and IBM had a new one waiting for me at my dorm within 24 hours of the service call. I was sad to see Ambra go.
    • http://www.computercraft.com/docs/ibm.html According to this website, in 1993 IBM created a PC dividion to compete agianst mailorder companies (Gateway, Dell, et al) and called that Dividion "Ambra".

      Dividion? Twice? That's one of the more creative examples of spelling I've seen it awhile. Bravo!

  • How many times is IBM gonna sell their PC business to that company??
  • More then likely it will just reduce the quality of the brand of PC formerly produced by IBM.. Down below the 'quality' of 'yet another PC clone' product.

    If they make cheap crap now, buying the rights to a quality name/product wont make them stop producing crap...

    I hope IBM retains the ThinkPads at least...

    Sad really.
  • by Brian Stretch ( 5304 ) * on Saturday December 04, 2004 @12:21PM (#10996412)
    Maybe we'll see Athlon 64 PCs from "IBM" this way. Lenovo is a big AMD customer. They aren't insecurely limiting their AMD64 usage because of a fear they'll outshine Power architecture machines like IBM is. C'mon IBM, listen to your software engineers and sell/promote the good stuff.
  • IBM's Thinkpad market has issues. The rest of the manufacturers are doing rings around them. AMD64's, 3 GHz Intel's, etc., while IBM still sits on 1.6 GHz/1.8 GHz. The base IBM laptop hardware may be built like a rock and look and feel like it, but when the purchasing public can buy a machine that has a widescreen display, reasonable sound, AMD64, FireWire, for half the cost of the Thinkpad, I know where the money ends up and it is not in IBM's pocket. Whenever you compare apples to apples, the bushel that
  • by justforaday ( 560408 ) on Saturday December 04, 2004 @12:46PM (#10996514)
    I guess we'll find out how true the saying really is...

    Nobody ever got fired for buying IBM.
  • Is IBM just going to buy it back after the rise and fall of the Chinese economy?
  • by TheLink ( 130905 )
    What's in it for Lenovo?

    What would they get and how much would they have to pay for it?

    Lenovo could use the same money to market their brand instead.

    Acer lags in brand-recognition coz their computers used to be suckier than the rest (I don't know about now) and they weren't cheaper either.

    Tons of US people buy Japanese cars. Now the Korean cars are gaining share.
  • I hope you people who say macs cost too much are happy. You guys pushed companies to outsource/offshore IT/tech jobs to satisfy your insatiable demand for cheaper and cheaper products. So you now you can afford to buy more technology products on your minimum wage you earn at the local burger joint. The only problem is all the higher wage jobs you had hoped to upgrade to eventually are now gone.

    They were destroyed by lower price demands, and monopoly pressure tactics. What we see here is a cannibalization

  • Hi IBM folks,

    Though my Thinkpad T40 was assembled in China, I understand that most, if not all, of the Thinkpad design came from your excellent Japanese lab. As far as I can say, your lab is one of the few that understands the balance between durability, usability and portability: Unlike Dell and HP ("bulky, heavy, suitable only for U.S. where people don't walk"), and unlike some Japanese makers ("make everything smaller, no matter how fragile it gets, and you have some unusable tiny keyboard as a bonus!"

  • by Epicanthics ( 837303 ) on Saturday December 04, 2004 @05:17PM (#10997860)
    I found this thread so disturbing I registered an account just to post a response.

    It seems that every time a Chinese company is brought up here or anywhere else, the response is the same. All the assumptions being thrown around in these that Legend Computer, and any other Chinese company for that matter, is a crap-peddling puppet of the government that abuses its workers are founded on pure ignorance.

    Lenovo, for one, is Asia's biggest PC manufacturer (non-Japan, that is) because it sells products people can actually afford. They've done more to help get the average Chinese citizen computer literate than any other private firm. Their machines are far from "crap." In fact, for the price, their machines are a far better deal than most American brands. (They also have spiffy "idiot" keys that reverts the machine to factory settings, which is pretty darn useful)

    This move is just an attempt to break into foreign markets as well. Instead of automatically assuming that the IBM brand is going to crap, I see Legend using the assets from this deal to at least attempt to start producing more high end products. Given the fact that most PC's are manufacturered in places like China anyway (the Compaq I'm typing this on was made in Shanghai), such a move up wouldn't be difficult. One more company competing in the desktop market isn't a bad thing, especially given the threat that Dell sees in Lenovo as a potential rival.

    The "ties" with the government amount to nothing more than some exclusive government contracts (just as Kosher as that "buy American" nonsense they have here). The company is also owned (65%) by the Chinese Academy of Sciences, but it began as and has always acted autonomously as a private firm based on western business models (specifically, it's modeled after Dell). Buying IBM isn't Chinese expansionism, it's a company trying to gain a competitive edge.

    It's also likely that the biggest shareholders in a company such as Lenovo just happen to also hold government positions, thus making the company technically "state-owned." Another example is that one of the owners of a startup ISP in China was a proffessor at Hangzhou University (family friend) who used his dual position to make business arrangements (SOP over there); the ISP is considered state-owned but certainly doesn't operate that way. The whole question of what is considered state-run and what is private in China is a lot more complex than just who has how many shares in what.

    Many of the labour problems associated with Chinese companies are the result of this privatization and lack of regulation and not some arbitrary government oppression like many people seem to think. If anything, the government needs to be more involved (and it's trying) in regulating private enterprise.

    That an article dealing with a business decision undertaken by a private Chinese company could spawn comments on the government's human rights problems is disgusting. It's equating the economic progress, the one positive hope for prosperity that the Chinese people could grasp in over a hundred and fifty years, to the shortcomings of the state.

    If Legend brand ever comes to the states, I'm buying one.

    Rant over. Going back to work.
  • Five, ten, fifteen, twenty years ago generic clones were a lot cheaper than name brand computers. But this last few years the difference in price between a name brand computer and a generic clone has shrunk. I used to build my own machines, for my self and my friends. But I can't do so anymore -- not for less than the cost of a store bought computer.

    If the profit to be made making these computers is slim, why not sell that part of the business to a place with lower labour costs? They aren't selling the

  • Every PC sans Mac comes off the same half dozen assembly lines. They just vary the plastic wrapper and the name badge.

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