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One company wants 50% profit margins, and the other is okay with 20%. The same business may be great for one and something that is dragging down the other.
by smackfu 13y ago
One company wants 50% profit margins, and the other is okay with 20%. The same business may be great for one and something that is dragging down the other.
- dagw 13y agoI imagine that when you are already making Intel based laptops and workstation, adding low end Intel based servers to your production line has a lower marginal cost than it would for a company that only makes Intel servers.
- lmz 13y agoThey already make servers: http://shop.lenovo.com/us/en/servers/ http://shop.lenovo.com/us/en/servers/
- smackfu 13y agoToo late to edit, but to give numbers, Lenovo had gross margin of 13% last quarter. IBM had 48%.
- redial 13y agoThe problem is that they are selling the business instead of adjusting it's structure to bring it inline with the levels of profits they are confortable with. The profits fell over the years because of 'disruptors', IBM could't accept the losses so they decided to sell. It happened 10 years ago in the PC, now it's happening with low end servers, maybe in 10 years high end servers are not going to be profitable for IBM any more and they are going to get rid of them.