I B M In Talks To Sell P C Business To China

[waldwolf]

NEW YORK TIMES/LONDON TIMES - According to people close to the negotiations, I.B.M. is in serious discussions to sell its PC business to Lenovo, the largest maker of PC's in China - a rapidly expanding market that Hewlett-Packard and Dell covet. I.B.M. is in talks with at least one other potential buyer. Industry experts note that a sale to Lenovo may create a powerful new rival with operations based in China.

Alan Promisel, an analyst at the research firm I.D.C., said a deal with Lenovo "would put up a significant roadblock to Dell and H.P.'s Asia Pacific expansion, at least potentially so." Mr. Promisel and others noted that a larger Lenovo, formerly known as Legend, could have the power to further squeeze down PC prices because of its track record as a producer of low-cost machines.

"If they're able to complete a deal," Mr. Promisel said, "Lenovo is obviously going to be more aggressive on the pricing front, which could lead to a compression on price points in the industry," potentially eating into the profits of every PC maker. The price for I.B.M.'s personal computer unit is likely to be $1 billion to $2 billion. A buyer would be purchasing the blueprints to the ThinkPad, generally regarded as the world's most reliable and secure laptops.

"The ThinkPad isn't just the best machine for the price," said Richard Dougherty, director of the Envisioneering Group, a market research firm in Seaford, L.I. "It is the machine for anyone concerned about security."

A buyer would presumably get the ThinkPad name and also I.B.M.'s customer list, but whether that would be worth much over time remains to be seen. According to people close to the negotiations, a buyer is also likely to get the use of I.B.M.'s brand name on PC's for a transitional period and I.B.M. may continue to sell the computers to corporate customers after the business unit is sold.

Additional news links:

London Free Press

InfoWorld

[melus]

China on the march..... to World Power No. 1

Not a chance!

But competing globally on its own, especially against Dell's vaunted manufacturing efficiencies, could be a stretch for Lenovo. An American venture capitalist who recently toured the Lenovo factory in Shanghai said that he had been surprised that it lacked the bustling, just-in-time urgency that he had observed on a similar tour of a Dell assembly line in Round Rock, Texas.

At the Lenovo site, pallets of computers were stacked high to the ceiling, according to the investor, who insisted on not being identified, and he said the production line was moving slowly compared with Dell's.