IBM sells PC business to China’s Lenovo for $1.25 billion

“China’s largest personal computer maker, Lenovo Group Ltd., said Wednesday it is buying control of IBM’s PC-making business for $1.25 billion, capping the U.S. tech giant’s gradual withdrawal from the business it helped pioneer in 1981. The agreement, which forms the world’s third largest PC business, calls for Lenovo to pay IBM $650 million in cash, $600 million in Lenovo Group common stock and for Lenovo to assume $500 million in net balance sheet liabilities from IBM. IBM will hold an 18.9 percent stake in Lenovo,” Reuters reports.

“Based on 2003 results, the companies will have annual revenue of $12 billion on sales of 11.9 million units, according to a news release,” Reuters reports. “The deal closes an era for the world’s largest computer company and kicks off a new age in which China’s top PC maker Lenovo steps onto the world stage as a major PC brand and IBM partner… Lenovo will take ownership of IBM ‘Think’ trademark family, including its ThinkPad notebook brand and its ThinkCenter desktop line.”

Full article here.

MacDailyNews Take: December 8, 2004. Apple Computer is still in the PC business. IBM isn’t. Whoda thunk it? On August 12, 1981, IBM released their first personal computer, the “IBM PC.” The “PC” stood for “personal computer” making IBM responsible for popularizing the term “PC.” The first IBM PC ran on a 4.77 MHz Intel 8088 microprocessor and came with 16 kilobytes of memory, expandable to 256k. The IBM PC came with one or two 160k floppy disk drives and ran a brand new 16-bit operating system from Microsoft called MS-DOS 1.0. The price tag started at $1,565, which would be nearly $4,000 today.


  1. All this talk about IBM being responsible for the personal computing market I hear in the press is pure bull.

    IBM asked Bill Gates in 1980 to develop a OS for their IBM 5150 computer. Which Bill couldn’t deliver (all he had was BASIC) so he bought the rights to hacked OS from Seattle Computer Products called “Quick and Dirty Operating System” or QDOS for short, which was changed to PC-DOS and later to MS-DOS!

    And for a long time Windoze was a shell on top of DOS, so now you know why Windoze sucks so badly.

    Now in 1976 Steve Jobs and Steve Wozniak formed the Apple Computer Company, on April Fool’s Day.

    Also in July 1976 The Apple I computer board is sold in kit form, and delivered to stores by Steve Jobs and Steve Wozniak. Price: US$666.66.

    (Clowns! both of them!)

    By 1980, over 160,000 Apple personal computers were already sold!

    By 1982, over 750,000 Apple personal computers have been sold.

    So keep that in mind folks if you read IBM was somehow “responsible” for the creation of the personal computer in the missinformed “press” lately.

  2. From: rlhamon

    What about the G5 processor will this be in the deal also?

    rlhamon no need to worry at all the G5 processors (PowerPC as far as IBM are concerned) have nothing to do with the PC product line. The IBM PC product line basically uses Intel chips, and runs Windows.

    IBM’s chip business is in a seperate part of the business – thank God!

    I think this is an extremely good move by IBM. Even though they were involved in the early days (if not the very begining) of the PC industry, does not mean that they have to stay in it forever.

    As Theodore Levitt’s famous article Marketing Myopia points out, successful business know when to enter AND exit an industry. They also have to focus on what they actually provide their customers. As an example from Levitts’ Marketing Myopia article:

    “The railroads did not stop growing because the need for passenger and freight transportation declined. That grew. The railroads are in trouble today not because the need was filled by others (cars, trucks, airplanes, even telephones), but because it was not filled by the railroads themselves. They let others take customers away from them because they assumed themselves to be in the railroad business rather than in the transportation business. The reason they defined their industry wrong was because they were railroad oriented instead of transportation-oriented; they were product-oriented
    instead of customer-oriented.”

    IBM (International Business Machines) is in the business of providing BUSINESS SOLUTIONS based on technology. The PC, when it was launched, was a revolutionary technological business solution, now a PC is as common as a stapler and photocopier (itself revolutionary at one time).

    Xerox is not a photocopier company, it is a document and knowledge management solutions company.

    IBM is focusing on providing technology solutions for customers businesses, it doesn’t need to make all the technology. High end servers, chip design, software solutions etc, are not as common as a stapler, and in these areas IBM expertise and knowledge still differentiates it from the likes of DELL – in a big way!

    Another example is GE (General Electric).

    Actually as I’m writing this the thought has occured to me that Apple’s iPod and “Digital Lifestyle” approach isn’t a totally differnt direction to what they set out to achieve all those years ago, as I am sure I’m not too off the mark in thinking their mission was to design technology products that make life easier and more enjoyable.

    Just my thoughts.



  3. IBM (International Business Machines) is in the business of providing BUSINESS SOLUTIONS based on technology. The PC, when it was launched, was a revolutionary technological business solution, now a PC is as common as a stapler and photocopier (itself revolutionary at one time).

    Xerox is not a photocopier company, it is a document and knowledge management solutions company.

    Sounds smart.. I like how you emphasize the vaguest terms so as to allow IBM some slack for turning its entire corporate culture on its head in the last 15 years (in a good way)… while making it look like they ‘meant’ things to turn out this way..

    Xerox IS a photocopier company.. they don’t get to decide.. the customers decide…. jeez.. can you come up with a few more vague euphemisms please?

    It’s not that IBM doesn’t need to provide the technology, it’s that the VALUE is no longer in hardware.. it’s services.. IBM never knew a damn thing about software.. when MS came along, IBM thought it would be a hardware driven market (ahem. like Apple…) and let MS have the ‘itty bitty software stuff’

    Once IBM was bumped from its high perch, it decided to a) get back to doing what it does best in hardware–> mainframes etc and b) watch for the next wave…

    IBM is now a very very hot services company that bundles its hardware with its services.. in fact, IBM’s brand almost REQUIRES that its hardware not be sold at Best Buy and Circuit CIty, etc. In other words.. IBM doesn’t care about the PC market.. This is a Service Economy.. and far be it for me to ‘give IBM the nod’ for focusing on selling busines expertise instead of commodity parts like Dell.

    (For what it’s worth..Dell knows it too and does Business Consulting also)

  4. Mike: At first sight, the words of LukeInOz seem to be stupid. However, but Levitt state it right.
    If you own a restaurant and you think you are selling food, you’re wrong and your personnel will act as in a supermarket, because they are food-oriented, instead of services-oriented.
    When you go to a restaurant, your espectations are on service over the food. A good service surpass a bad food; however, a good food does not surpass a bad service.
    What does the customers in the computer market expect? One word: Service. Service is everything.
    My father use to work as manager in a chain of Automotive Parts stores. Somebody told them once: You sell the service of haveing the parts that customer expect you to have or at least find that part as soon as possible, hence, you are a SERVICES company. Services on the automotive parts market, but your service is to get the right part for the right customer.
    When you rethink on your company’s orientation, that sole new thought reorients your company.

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