IBM still trying to ditch x86 server business

Why won't they just go away?

IBM is attempting to once again sell its low-end server business after a deal fell through last year, and Dell is one of the companies considering the buyout.

The business giant has been trying to offload its x86 server unit, known as System x, for a while now, and is back in sale mode, according to sources cited by the Wall Street Journal.

The move follows a failed deal with Lenovo in the first half of 2013, which broke down over a dispute about the selling price of the server unit.

Lenovo allegedly valued the business at less than $2.5 billion (£1.5 billion, AU$2.8 billion), substantially lower than the $6 billion (£3.6 billion, AU$6.8 billion) IBM initially was looking for. Lenovo previously bought IBM's personal computer business.

A new year, a new deal

It is believed that Dell is an interested party in the acquisition, but it is not yet clear how much it is willing to offer. Dell is already third in the server league in terms of revenue, so further expansion to the low-end server market could help it boost its position.

The problem for IBM, however, is that the x86 server market, which boomed in the 1990s, has suffered at the hands of high-end server rigs and the growing cloud computing sector. Even the fact that IBM wants to get rid of this part of its business shows a certain disinterest in the area.

Sales of servers using the x86 architecture accounted for $4.9 billion (£3 billion, AU$5.6 billion) of IBM's revenue in 2012, according to Morgan Stanley. This compares to $15.4 billion (£9.4 billion, AU$17.5 billion) for its overall server business. The figure for Server x revenue is likely to be smaller for 2013.

Via: The Register