Rumor: IBM to Leave PC Business - ThinkPad Brand to be Sold

IBM started the PC revolution well over twenty years ago now. They and Toshiba were two of the first companies on the scene with Laptops. And while IBM is number 3 in PC sales behind Dell and HP, the drive to lower profit margins on sales of desktops and laptops is likelycausing IBM to exit what it views as a commodity business now. The tragedy is that the ThinkPad brand has been one of the highest quality and innovative line of laptops with the best service and customer satisfaction provided. It will be a loss to the consumer, no doubt.

The venerable IBM ThinkPad -- Will it soon become the "Lenovo ThinkPad"

Although IBM is not commenting on what the New York Times has reported today in regards to the sale of their PC business, analysts say it makes complete sense for IBM as they want to focus on their consulting and software business that have higher profits andare less of a commodity. The word is that Lenovo of China is interested in buying the PC business from IBM. And although the sale of the IBM PC business or a creative partnership between Lenovo and IBM would mean the ThinkPad brand goes on living, the quality and support would obviously suffer. The focus will be on reducing costs of production for the IBM ThinkPad and that will obviously mean lower quality components, cheaper production methods and a focus on squeezing price on components purchased to manufacture the Thinkpad line.

So, if you want a present-day quality built IBM ThinkPad you might want to buy it sooner rather than later. The sad thing is while I have always been a huge advocate of IBM and the quality product and support they provide for their notebooks, it's hard for me to now say buying an IBM is a "good move" if you want to be guaranteed top knotch service 2-years down the road.

But on the flip-side, we will have to wait and see how this all pans out. No doubt corporate customers who already buy IBM desktops and ThinkPads will want IBM to stick around making their PCs and will voice this fact to IBM, possibly by promising future purchases. It also makes sense for IBM to bundle consulting and software service sales with sellng their PC product lines to those same businesses, so they might wish to keep a certain share and control of their PC business.

At the end of the day though, the fact IBM is even contemplating selling their PC business is bad news for us all really. It means competitors likeDell and HP have squeezed margins so much and figured out cost cutting mechanisms, with the result of a slightly less quality end product, and so have won the day. The message this sends is that the business reasons for producing a more expensive laptop with higher quality components and design is just not logical for companies such as IBM.

 

abaxter, if IBM were to sell their computer business how visible would this be to customers? I mean, if the new buyer went ahead and used different suppliers and manufacturers...then the product really wouldn't be a "ThinkPad" anymore. It would be in name only, which wouldn't mean much.

 

You hit the nail on the head, it wouldn't be the same build or manufacturing process anymore, but it might well still carry the "IBM ThinkPad" branding. It would likely be made by a Chinese company named Lenovo and their goal would be to boost profits of selling the ThinkPad by using cheaper parts.

It would, alas, only be a ThinkPad in name and not as we knew it and be basically another run of the mill computer of the same build and quality as Dell and HP.

[V]

 

the uncertainty of parts, maintenace, upgrades, support, and warranty will get factored into the price by the market. this may lead to some nice price drops in the near term.

 

I'm not sure IBM would be willing to risk it's own name for the near future. Even if the deal goes through, warranty and support for existing thinkpads should still be top notch. As for build quality, I'm a little confused on. IBM outsources it's manufacturing out to outside parties after it designs the laptop. I think I read somewhere that thinkpads since 2003 have been built in China already. It's hard to see what Lenovo plans to do with such a successful line of notebooks, but I doubt they would shell out $2 billion dollars only to see it go down the drain by dropping quality. So in my opinion, I think Lenovo will do the right thing and keep the "thinkpad image". Who knows, this could actually benefit the consumer with a lower priced, quality laptop.

 

Well,when I have seen this article headline,I suddenly felt,that s a sorrow,bad situation.For me I couldnt wanna to see IBM s out of pc business,but this market s profit margin s so narrow.Asian manufacturers have so many chances when I compare to west manufacturers(definetely labor wages),it s so normal for me to tell why all these jobs go like this,maybe we can see other firms out of pc business...In this point we must discuss how can consumers find the best quality like IBM in other brands?or how much quality do we talk? no doubt it will be a big loss if it s true...

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The problem with IBM is that they are idiots .

Brilliant in Tech , nit wits in Marketing .

Thats how they lost lost the PC market in the 80 , they had it all : good hardware , first to the market but instead of taking advantage of it they lost it to others that copied their machines ( i remember the term IBM compliant ) .

Now same thing all over again , they got the best machines but insist on making their machine look all alike and as ugly and boring as they can ( apperntly consistent ugly & boring means business ) .

Why not go to the consumer market ? Why not put out a line of "entertainmet" notebooks ? Why not lower the specs a bit and reach more pepole ? Don't they understand notebooks need to be fashioned and not look like an 80's machine keyboard style ? And the funny thing they don't have to do much , just add some zest and sell them in the overpriced sony range .

 

<blockquote id='quote'> quote:<hr height='1' noshade id='quote'>Originally posted by gilo

 

I just don't think IBM is interested in the consumer market simply because they have a brand and an image to keep for the company as a whole -- maybe they could reach a larger market if they made say a burgundy red ThinkPad (?) but introducing low-end consumer machines hurts the branding of higher-end machines. It's like saying, why doesn't Gucci make $20 shoes and sell them in Wal Mart so they can increase revenue.

I think your statement about IBM being bad at marketing is completely wrong, the ThinkPad brand is one of the strongest in computing (right behind Intel Inside maybe) and has been studied as a case example of good brand building and marketing in many an MBA class, and books have been written dedicated to studying the success of the ThinkPad brand and how it was created, the book titled "ThinkPad: A Different Shade of Blue" is such an example

http://www.amazon.com/exec/obidos/ASIN/0672317567/qid=1102188637/sr=2-1/ref=pd_ka_b_2_1/104-2519918-8159926

 

Again, the cheaper the better, especially for laptop. How often you change your laptop, for me, 2 years. Here is the choice, you can spend $2000 for a T42, or buy a same configuration from dell or hp at $1000. Though T42 has better quality, but after 2 or 3 years, they are all junk. Laptop is not like TV which can use about 10 years.

 

I think the reason IBM want to sell they Thinkpad brand to Levono is IBM want to increase their profit in China, the best selling laptop in China is IBM, the second one is Levono, Levono has been keeping the 1st place for many years in China. As a enginner used to working in a Taiwannese company who manufacture IBM, dell, Hp, and Levono, my coworkers always complain that the highest quality requirement is from Levono which means we got lots of product return for re-do. In China, the price of IBM laptop is twice as much as in USA, so they'd better close their laptop business in US and move to China, but China has lots of restriction on foregin companies, that's is why they decide merge to Levono.

 

maoxong, what you say is interesting and thanks for your input regarding Lenovo (or is it Levono -- not sure on the spelling? It used to be Legend Computer). I didn't know that they had a reputation for being a high-quality manufacturer, but maybe they are a good fit with IBM after hearing what you say. They have a lot of money on hand if they can afford to buy the IBM computer business, that's all I know!

I agree with your opinion on the life-span of a notebook. If you use a notebook all the time like myself, it seems 2-years is the maximum lifespan before the machine will either look awful or have defects showing up. I actually replace my laptop every year or so -- that's extreme when compared to the average consumer though. Meanwhile I have a JVC TV that's 8+ years old and I don't think I'll replace anytime soon!

 

I try to replace my laptop every one or two years as well. I just cut back on other expenses so the costs equalize, heh. For example, I haven't eaten out a single time in three months, and I make sure to stock up on stuff at Costco.

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On the flip side, this probably means LG will be able to sell their products in the US

--
LG LM50 / Dothan 745
jerrett.net

 

An update on the could-be-and-soon-to-be fact:

http://yahoo.reuters.com/financeQuoteCompanyNewsArticle.jhtml?duid=mtfh46973_2004-12-07_08-41-57_hkg145548_newsml

The bright side of it is that IBM may keep some of its business, but which part and how that is going to affect consumers is still unknown.

 

and more news, Michael Dell chimed in to say he thinks the deal is silly:

http://news.com.com/Michael+Dell+IBM+deal+a+dud/2100-1042_3-5481714.html?tag=nefd.top

He also stated Dell is not interested in buying the IBM unit -- phew!

 

It is official now:

http://biz.yahoo.com/ap/041207/ibm_pc_business_4.html