The China Syndrome - If You Want to Understand IBM Selling Its PC Division, Just Look East

Why IBM Sold Its PC Division to Lenovo

NEC paid more than $1.8 billion for Packard Bell. Gateway paid more cash for e-Machines than Lenovo is paying for IBM (around $1.75 million in cash and stock). So why the deal?

Robert X. Cringely says, "IBM got rid of a headache and in doing so, gained unique access to what will shortly be the world's largest IT market. This deal is all about China, not the U.S.

Doing business in China always requires having a partner. You don't just set up an IBM China and start selling stuff. You find a local partner company and move into the market together. Now IBM's partner will be Lenovo, the biggest, baddest PC maker in China, which is a good partner to have. IBM not only has its Chinese partner, it has a substantial equity position in that partner as a result of this transaction. That's unique as far as I know. Chinese-U.S. corporate partnerships aren't always the easiest marriages, but in this one, IBM actually has a vote. It also got Lenovo to move its global headquarters to the U.S. and accept an American CEO and 10,000 U.S. employees, which will have to change the way Lenovo runs its global business."