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Acquisition of the IBM PC business by Lenovo

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Acquisition of the IBM PC business by Lenovo
Logo of IBM since 1972
Logo of Lenovo between 2003 and 2015
InitiatorLenovo
TargetIBM (IBM Personal Systems Group)
InitiatedDecember 9, 2004[1]
CompletedMay 3, 2005[2]

The acquisition of IBM Personal Systems Group, the PC business arm of International Business Machines (IBM) Corporation, by Lenovo was announced on December 9, 2004, and was completed on May 3, 2005.[3][4]

Background

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In September 1992, IBM combined and spun off their various non-mainframe and non-midrange, personal computer manufacturing divisions into an autonomous wholly owned subsidiary known as the IBM Personal Computer Company (IBM PC Co.).[5][6] This corporate restructuring came after IBM reported a sharp drop in profit margins during the second quarter of fiscal year 1992; market analysts attributed the drop to a fierce price war in the personal computer market over the summer of 1992.[7] The corporate restructuring was one of the largest and most expensive in history up to that point.[8] By the summer of 1993, the IBM PC Co. had divided into multiple business units itself, including Ambra Computer Corporation and the IBM Power Personal Systems Group, the former an attempt to design and market "clone" computers of IBM's own architecture and the latter responsible for IBM's PowerPC-based workstations.[9][10]

In 1998, IBM merged the enterprise-oriented Personal Systems Group of the IBM PC Co. into IBM's own Global Services personal computer consulting and customer service division. The resulting merged business units then became known simply as IBM Personal Systems Group.[11] A year later, IBM stopped selling their computers at retail outlets after their market share in this sector had fallen considerably behind competitors Compaq and Dell.[12] Immediately afterwards, the IBM PC Co. was dissolved and merged into IBM Personal Systems Group.[13]

On September 14, 2004, LG and IBM announced that their business alliance in the South Korean market would end at the end of that year. Both companies stated that it was unrelated to the charges of bribery earlier that year.[14][15][16][17] Xnote was originally part of the joint venture and was sold by LG in 2012.[18]

Acquisition

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Sign outside of the IBM Yamato Facility in Japan in 2007

On December 3, 2004, The New York Times reported that according to involved people IBM wanted to sell their PC business. IBM spokesperson Edward Barbini stated: "IBM has a policy of not confirming or denying rumors."[19] On December 9, 2004, Chinese technology firm Lenovo announced its intent to purchase the IBM Personal Systems Group for $1.3 billion in an all-stock deal.[1] In 2005, some doubts were raised on the matter of national security of the United States.[20] On March 9, 2005, the Committee on Foreign Investment in the United States confirmed to IBM that the acquisition could finish.[21] The deal was closed on May 3, 2005.[2] Part of the deal included that Lenovo would move their global headquarters from Beijing to New York.

Starting in 2006, Lenovo distanced themselves from the IBM brand.[22]

In 2007, IBM sold US$85 million of Lenovo shares.[23][24][25]

In December 2007, the "Lenovo Pride Day" event was held. Lenovo employees peeled off the IBM stickers from their equipment and replaced it with Lenovo stickers.[26]

Further developments

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In 2014, Lenovo also acquired the x86 server business from IBM.[27]

Columnist Tim Bajarin from PC Mag stated in 2015 that he was originally highly pessimistic about the deal. He suspected that talented employees would not leave IBM. He praised the Lenovo employees for doing a good job on integrating the business.[28]

When former CEO of IBM Samuel J. Palmisano planned on departing in 2011, he was interviewed by The New York Times. He stated that he avoided negotiations with Dell and private equity firms and preferring Lenovo for strategic reasons. He stated that the government of China want their companies to expand globally, IBM enhanced themselves in the Chinese market.[29]

See also

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Further reading

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  • "Lenovo, on top of the PC world - People's Daily Online". en.people.cn. Retrieved April 16, 2023.

References

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  1. ^ a b Williams, Martyn; Kallender, Paul (December 9, 2004). "China's Lenovo to buy IBM's PC Business". InfoWorld. Retrieved October 3, 2008.
  2. ^ a b "IBM closes China deal on PC unit". The New York Times. May 3, 2005. ISSN 0362-4331. Retrieved March 29, 2023.
  3. ^ Kumar, Nirmalya (2013). Brand breakout: how emerging market brands will go global. Jan-Benedict E. M. Steenkamp. Houndmills, Basingstoke, Hampshire. ISBN 978-1-137-27662-9. OCLC 851972628.{{cite book}}: CS1 maint: location missing publisher (link)
  4. ^ Hamm, Steve; Pete Engardio; Frederik Balfour (December 20, 2004). "Big Blue's Bold Step into China". BusinessWeek (3913). Bloomberg L.P.: 33–34. Archived from the original on May 12, 2023.
  5. ^ Burgess, John (September 3, 1992). "IBM Plans Division For Its PC Business; One Executive Expected to Be Put in Control". The Washington Post. p. B11. Archived from the original on May 12, 2023.
  6. ^ Burgess, John (November 26, 1992). "With New Approach and Executive Team, IBM Seeks a Rebirth". The Washington Post. p. D1. Archived from the original on May 12, 2023.
  7. ^ Hooper, Lawrence (September 3, 1992). "IBM to Unveil New Structure of PC Business". The Wall Street Journal. Dow Jones & Company: A3 – via ProQuest.
  8. ^ "IBM reports record loss of $8 billion". Austin American-Statesman. Knight-Ridder Tribune Service: B6. July 28, 1993 – via ProQuest.
  9. ^ Lohr, Steve (August 2, 1993). "I.B.M. and Dell Stake Out the Little Picture in PC's". The New York Times: D2. Archived from the original on May 26, 2015.
  10. ^ Burke, Steven (September 11, 1995). "IBM Power Personal Systems group to be folded into PC Co". Computer Reseller News (648). CMP Publications: 7 – via ProQuest.
  11. ^ Zimmerman, Michael R.; Lisa Dicarlo (December 14, 1998). "Not Your Father's PC Company Anymore". PC Week. 15 (50). Ziff-Davis: 1 – via ProQuest.
  12. ^ Hansell, Saul (October 25, 1999). "The Strategy For I.B.M.: Loss-Leader PC Sales". The New York Times. ISSN 0362-4331. Retrieved March 29, 2023.
  13. ^ Greiner, Lynn (October 22, 1999). "Big Blue to combine PC division with PSG". Computing Canada. 25 (40). Plesman Publications: 6 – via ProQuest.
  14. ^ Won Choi, Hae (September 15, 2004). "IBM, LG Electronics Call Halt To PC Joint Venture in Korea". The Wall Street Journal. ISSN 0099-9660. Retrieved November 25, 2022.
  15. ^ Sung-ha, Park (August 30, 2004). "LG, IBM to split by end of year". Korea JoongAng Daily. Retrieved November 25, 2022.
  16. ^ "IBM, LG Electronics to End Joint Venture". Forbes. Archived from the original on October 22, 2004.
  17. ^ Vance, Ashlee. "South Korea slams IBM with server slush fund charges". www.theregister.com. Retrieved November 25, 2022.
  18. ^ "Laptop Retrospective". Laptop Retrospective. Retrieved April 16, 2023.
  19. ^ Ross Sorkin, Andrew; Lohr, Steve (December 3, 2004). "I.B.M. Said to Put Its PC Business on the Market". The New York Times.
  20. ^ Lohr, Steve (January 31, 2005). "Is I.B.M.'s Lenovo Proposal a Threat to National Security?". The New York Times.
  21. ^ Bostrom, Johan (March 9, 2005). "U.S. government committee OKs IBM/Lenovo deal". Computerworld. Retrieved November 17, 2022.
  22. ^ Rifkin, Glenn; Smith, Jenna (April 11, 2006). "Lenovo making a break with the IBM brand". The New York Times. ISSN 0362-4331. Retrieved March 24, 2023.
  23. ^ "IBM selling up to $85 mln in Lenovo shares". Reuters. May 8, 2007. Retrieved November 17, 2022.
  24. ^ Lemon, Sumner (February 6, 2007). "IBM sells part of its stake in Lenovo". Computerworld. Retrieved November 17, 2022.
  25. ^ Kong, Joyce Li and Ernest (February 6, 2007). "IBM Plans Sale Of 3.5% Stake In Lenovo Group". Wall Street Journal. ISSN 0099-9660. Retrieved November 17, 2022.
  26. ^ Stefanowski, Robert (2018). Material Adverse Change: Lessons Learned from the M & A Failutres of the Great Recession. Somerset: John Wiley & Sons, Incorporated. p. 143. ISBN 978-1-118-22243-0. OCLC 1030034685.
  27. ^ "Lenovo Acquires IBM's x86 Server Division". PC Mag. Retrieved November 17, 2022.
  28. ^ "10 Years Later, Looking Back at the IBM-Lenovo PC Deal". PCMAG. Retrieved November 17, 2022.
  29. ^ Lohr, Steve (December 31, 2011). "Even a Giant Can Learn to Run". The New York Times. ISSN 0362-4331. Retrieved November 18, 2022.
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