"They just stole IBM's PC division for a billion and change (hey, where are the Sherman Antitrust enforcers nowadays???). $499 billion left to play with, and the year isn't over yet."
Remember the '80s? When all our real estate was being bought by the Japanese. Got stuck with a bunch of overpriced property just like IBM stuck China.
Remember, by taking over the asset, China is in a position to consolidate, and perhaps monopolize. Transfer any technology they don't already have back to China. For a billion they aren't using anyways. The IBM PC Division was running on razor-thin margins...but it was making money...and had a decisive niche market. Now China will have that niche. And IBM has to cooperate in the use of its name.
By INQUIRER staff: Wednesday 08 December 2004, 07:50
BIG BLUE confirmed it has sold its PC division to Lenovo - barring X86 servers - for $1.25 billion, while taking a 19 per cent share in the Chinese company formerly known as Legend.
The move marks not only the end of IBM's long adventures in the PC business but a clear shift in the centre of gravity of the industry from the US to China.
The $1.25 billion Lenovo will pay is a mixture of cash payments and shares, with Big Blue holding 18.8% of Lenovo's business. IBM will retain the right to provide services for PCs, while the head of its Personal Systems Group will become a top gun in Lenovo once the deal has been approved.
IBM's CEO Sam Palmisano said that Big Blue salesmen would continue to get commission on sales of Lenovo machines and his company would continue to use these machines within its own business.
IBM introduced its rather functionally deficient PC in 1981 and the introduction of Lotus 1-2-3 for the machine made it an option for corporate buyers. The mantra used those days was that no one ever got fired for buying IBM, and personal computers started to become acceptable in business environments.
The growth of the PC in corporate environments catapulted a number of hitherto obscure firms into the limelight, including Intel and Microsoft, and, later on, Compaq and Dell.
Although IBM attempted to forge a partnership with Microsoft in 1987 to create OS/2 as a real OS system rather than the brain dead DOS, eventually that partnership died a death and the Seattle firm decided to push its own graphical environment, Windows.
Despite Big Blue having its own suite of desktop application software, other companies including Lotus, Ashton Tate, Wordperfect, Wordstar, Borland and eventually Microsoft, were able to understand selling such packages far better than IBM. At one time, IBM charged customers well over $1,000 to write PC printer drivers for non-Big Blue devices.
IBM's idea in 1987 was that it could continue to dominate the PC market with the introduction of its own proprietary hardware architecture, MCA. But no one was fooled by that and droves of potential customers flocked to a rapidly growing set of clone PC manufacturers.
Big Blue continued to turn over around $10 billion a year on sales of its notebooks and desktops, and the sale to Lenovo will put the Chinese firm into the third biggest vendor of these machines worldwide after Dell and Hewlett Packard. Ten thousand IBM employees will be transferred to Lenovo, a quarter of those are based in the USA.
Capital should be mutually accumulating under "free trade"...our firms should becoming wealthier...not progressively selling off their posterity and becoming weaker and weaker. Only the unflinchingly pro-American national security advocates have been accurately predicting all these turns of events.
And the grim future we have forecast is unfolding before our eyes.