IBM puts its personal computer biz up for sale

International Business Machines, whose first IBM PC in 1981 moved personal computing out of the hobby shop and into the corporate and consum...

International Business Machines, whose first IBM PC in 1981 moved personal computing out of the hobby shop and into the corporate and consumer mainstream, has put the business up for sale, people close to the negotiations said yesterday.

While IBM long ago ceded the lead in the personal computer market to Dell and Hewlett-Packard so that it could focus on the more lucrative corporate server and computer services business, a sale would nonetheless bring the end of an era in an industry that it helped invent. The sale, likely to be in the $1 billion to $2 billion range, is expected to include the entire range of desktop, laptop and notebook computers made by IBM.

The retreat from the business may be the ultimate acknowledgement that the personal computer has become a staple of everyday life, a commodity product, yielding very slim profits. The companies that make the most money from PC’s these days are Microsoft and Intel — whose software and chips are the standard for most of the personal computers sold, regardless of the maker.

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According to the people close to the negotiations, IBM is in serious discussions with Lenovo, China’s largest maker of personal computers, and at least one other potential buyer for the unit. Lenovo was formerly known as Legend.

A spokesman for IBM said, ‘‘IBM has a policy of not confirming or denying rumours.’’

If IBM’s personal computer business ends up being sold to Lenovo, it would continue the migration of high-technology manufacturing to China and Taiwan. In the 23 years since IBM lent its prowess in mainframe computers to the production of desktop machines, it has been widely criticised for having destined the machines to commodity status by giving Microsoft and Intel the rights to those essential standards.

And although Apple Computer holds less than 4 per cent of the personal computing market worldwide, it has been able to command relatively high prices and richer profits because it has controlled the software and hardware that goes into its machines.

	8 per cent IBM PCs sold in H1

			• NEW DELHI: In India, 8 per cent of all PCs sold in the first half of 2004 were from IBM India. At number three position, after HP and HCL with 15 and 12 per cent market share, IBM outpaces Dell and Zenith in India. IBM also leads the market share for laptops, growing 85 per cent in the third quarter of 2004. In this fastest growing segment, IBM corners a 3.7 per cent market share, IDC said in November 2004. —ENS Story continues below this ad

A sale of the personal computer business would be a step away from IBM’s traditional emphasis on the size of its revenue as a measure of its corporate power. The PC business represents about 12 per cent of IBM’s annual revenue of $92 billion.

For nearly a decade, though, some industry analysts have urged IBM to get out of that business as it made only a modest profit or lost money.

Analysts have expected a pretax profit of less than $100 million.

IBM executives long resisted that, arguing that PCs were technology products its corporate customers wanted.

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But recently, IBM ranked a distant third in worldwide PC sales, with 5.6 per cent of the market, according to Gartner. — NYT

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