IBM to exit PC business?

3 Dec 2004

Computer giant IBM is in negotiations to sell its desktop and laptop PC business to a Chinese manufacturer for between US$1bn and US$2bn, according to reports. IBM was central in starting the personal computer business as we know it when it introduced the industry’s first PC in 1981.

According to a report in The New York Times, Big Blue is trying to sell its PC business in order to focus instead on the more lucrative corporate server and computing services businesses. The company has seen its PC market share fall over the past number of years and has ceded ground to rivals such as Dell and HP.

The report claims that IBM is understood to be in negotiations with Lenovo, China’s largest maker of personal computers and at least one other potential buyer.

The PC business represents around 12pc of IBM’s annual revenue of US$92bn. Globally IBM is in third place in terms of worldwide PC sales, according to Gartner, with 5.6pc of the world market compared with Dell with 16.8pc and HP with 15pc.

In recent months there has been mounting speculation about a consolidation of the PC industry over the next few years with both IBM and HP being tipped to sell off their PC divisions because they represent a huge drag on margins and profitability.

By John Kennedy