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IBM-Lenovo deal likely to focus on low-end, commodity servers, analyst says

James Niccolai | April 19, 2013
Any deal by IBM to sell parts of its server business to Lenovo is likely to focus on low-end commodity x86 hardware, not higher-end x86 systems such as IBM's PureSystems and iDataPlex servers, an industry analyst said Thursday.

But exiting the commodity x86 server market is not such an obvious good move for IBM as exiting the PC market, Olds said. Low-cost x86 servers remain a core part of the infrastructure used in hot markets such as big data analysis and cloud deployments.

Revenue from x86 servers climbed 6 percent in the fourth quarter last year to $9.7 billion, according to figures from IDC. That was the highest quarterly revenue ever recorded for x86 servers, which accounted for two-thirds of all server spending.

While IBM wouldn't comment on any talks with Lenovo, CFO Mark Loughridge did say on IBM's earnings call Thursday that parts of its business are "in transition or have been underperforming." He singled out Power systems, storage products and System x, which is IBM's brand for its x86 systems.

"Here we are going to take substantial actions," he said, without elaborating. He added later that the company has actions planned to improve its long-term performance, including "acquiring and divesting businesses."

 

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