IBM, one of the best known names in computing, is selling its PC making business to China’s largest personal computer firm Lenovo in a deal worth nearly one billion euros.The sale means IBM will be able to concentrate on its more profitable service and software businesses, while Lenovo gets the benefits of one of the world’s most powerful brands. IBM Senior Vice President John Joyce said: “The IBM brand will gain great recognition in China, the world’s fastest growing economy and the world’s fastest growing market for PCs. We believe this partnership will be positive for IBM’s porfolio of computer hardware, software, services and financing.”
The deal, which is one of the largest ever foreign acquisitions by a Chinese company, has taken more than a year to negotiate.
The enlarged Lenovo will have annual revenues of over nine billion euros. It was the eighth largest personal computer maker in the world market and it will it now become the third, after Dell and Hewlett PackardBut the Chinese company’s CEO, Yang Yuanqing, said they will not be satisfied with that position. He also explained why they wanted IBM’s PC business. He said: “The Chinese market has reached its limit. We have 30% of the Chinese market, but if you want to develop, you should build business in the international market. That’s why our strategy is to be an international company, so we made this agreement.” The challenge now for Lenovo will be to make the business more profitable. Their rivals were sceptical. Dell’s founder Michael Dell said there has not been a successful merger or acquisition in the computer industry in a very long time and Hewlett Packard predicted it would benefit from turmoil created in IBM’s accounts.