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Lenovo is quite successful. I have to wonder, why did IBM sell its laptop and PC businesses to them, later its server business as well? Lenovo got not only the

Lenovo is quite successful. I have to wonder, why did IBM sell its laptop and PC businesses to them, later its server business as well? Lenovo got not only the brand, but also advanced production lines, technology, engineering and sales teams. What did IBM get? A few billion bucks, and 18.5% share of Lenovo, which they've largely sold off. Maybe IBM should have invested that money into fixing what was wrong with their profitability and management model. Hire Lenovo to manage the product lines or do a joint venture like GM-Toyota. It's sad to see a once great company just give up the fight.

snarf21 6y ago
A lot of this is investor pressure and price/dividends at any cost. Consulting has a lot higher margins and is easier to fire in a downturn. They gave up the fight a long time ago. Invest in the future or you won't have one.
vonmoltke 6y ago
This assumes IBM had the institutional competencies and structure to make that division work as well as Lenovo has. It's quite possible, and IMO likely, that IBM's former laptop and small server/workstation business is doing so well because IBM sold these lines to a company that has the correct core competencies. It's a common problem with companies like IBM and GE that try to go or stay too broad. It's hard to stay top-tier in several verticals at once without decentralizing the company to the point that each vertical is defectively an independent company anyway. Google has tried this with the Alphabet reorganization. GE partially did that with its quasi-independent business units, many of which it ended up selling anyway. IBM seems, from the outside, to be too monolithic to effectively divest a subsidiary. I think it will be telling what it does with Red Hat.
- MichaelZuo 6y ago
  Indeed the phenomena of large highly diverse organizations trying to be experts, i.e. number one or number 2, in every sub domain is really untenable past a certain size. Even the casual observer begins to notice the pretense of competence versus actual competence. Perhaps the underlying forces are structural.
- nfriedly 6y ago
  > ...each vertical is defectively an independent company... Not sure if that was a typo or not, but it's pretty funny either way :)
microtherion 6y ago
> Lenovo got not only the brand, but also advanced production lines I may be mistaken, but I thought at the time of the sale, Lenovo was already doing the manufacturing?
- tsjq 6y ago
  Yee
- toyg 6y ago
  Only some of it, if i remember correctly. The classic business-oriented Thinkpad lines actually did not move to Lenovo factories for years after the acquisition closed, since Lenovo wanted to get right the knowledge-transfer and to avoid spooking customers. Indeed, the first lines of full-Lenovo laptops felt cheap and were widely panned, it took a while for them to match the classic Thinkpad reputation.
duxup 6y ago
I don't know the back story but it's also possible: IBM recognized "we're not the guys to do this anymore" and there was more value selling it and focusing on what they think they can do well (or what they thought they could do)? Then from there Lenovo was able to focus on what they do well. I really do think that a lot of companies would benefit from recognizing what their core competencies are and really doing those things. We see big name companies pick up products and sort of side step into similar markets or even just remain in markets that ... they're just not good at. I'm thinking if companies like Cisco's efforts to get into consumer gear of various forms but still coming from a very different world of B2B, and working in a market they already dominate type stuff.

snarf21 6y ago

A lot of this is investor pressure and price/dividends at any cost. Consulting has a lot higher margins and is easier to fire in a downturn. They gave up the fight a long time ago. Invest in the future or you won't have one.

vonmoltke 6y ago

This assumes IBM had the institutional competencies and structure to make that division work as well as Lenovo has. It's quite possible, and IMO likely, that IBM's former laptop and small server/workstation business is doing so well because IBM sold these lines to a company that has the correct core competencies. It's a common problem with companies like IBM and GE that try to go or stay too broad. It's hard to stay top-tier in several verticals at once without decentralizing the company to the point that each vertical is defectively an independent company anyway. Google has tried this with the Alphabet reorganization. GE partially did that with its quasi-independent business units, many of which it ended up selling anyway. IBM seems, from the outside, to be too monolithic to effectively divest a subsidiary. I think it will be telling what it does with Red Hat.

MichaelZuo 6y ago
Indeed the phenomena of large highly diverse organizations trying to be experts, i.e. number one or number 2, in every sub domain is really untenable past a certain size. Even the casual observer begins to notice the pretense of competence versus actual competence. Perhaps the underlying forces are structural.
nfriedly 6y ago
> ...each vertical is defectively an independent company... Not sure if that was a typo or not, but it's pretty funny either way :)

microtherion 6y ago

> Lenovo got not only the brand, but also advanced production lines I may be mistaken, but I thought at the time of the sale, Lenovo was already doing the manufacturing?

tsjq 6y ago
Yee
toyg 6y ago
Only some of it, if i remember correctly. The classic business-oriented Thinkpad lines actually did not move to Lenovo factories for years after the acquisition closed, since Lenovo wanted to get right the knowledge-transfer and to avoid spooking customers. Indeed, the first lines of full-Lenovo laptops felt cheap and were widely panned, it took a while for them to match the classic Thinkpad reputation.

duxup 6y ago

I don't know the back story but it's also possible: IBM recognized "we're not the guys to do this anymore" and there was more value selling it and focusing on what they think they can do well (or what they thought they could do)? Then from there Lenovo was able to focus on what they do well. I really do think that a lot of companies would benefit from recognizing what their core competencies are and really doing those things. We see big name companies pick up products and sort of side step into similar markets or even just remain in markets that ... they're just not good at. I'm thinking if companies like Cisco's efforts to get into consumer gear of various forms but still coming from a very different world of B2B, and working in a market they already dominate type stuff.