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Sun 5 Dec 2004 04:00 AM

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IBM looks to exit PC stage

In 1981, IBM’s PC was declared Man of the Year by Time Magazine: now the IT company is looking at getting out of the PC business altogether

In 1981, IBM’s PC was declared Man of the Year by Time Magazine: now the IT company is looking at getting out of the PC business altogether, according to reports.

The New York Times reported last week that IBM is on talks with the Chinese PC company Lenovo to take over its entire portfolio of desktop and laptop computers, in a deal that could be worth as much $2 billion. Lenovo, formerly known as Legend, is China’s leading PC manufacturer and was ranked ninth largest PC company in the world by analyst firm Garter Group.

While IBM has steadily retreated from the PC business in recent years – largely moving out of the consumer PC market to focus on corporate sales – it is still ranked the third largest PC manufacturer in the world. However, with analysts estimating it has a market share of just under 6%, it trails behind Dell and HP, who both have over 16% market share.

IBM has already moved out of actual PC manufacturing, with all of its branded PCs and notebooks being made by contract manufacturers around the world. Since current chief executive Samuel Palmisano took control in 2002, he has pursued a policy of focusing on the company’s services business at the expense of hardware.

However, as IBM also likes to pursue a policy of being able to offer corporate customer a complete solution from PCs through to large enterprise servers, then it may be that it will wish to retain a stake in its PC business. Some industry watchers are tipping a joint venture with Lenovo as more likely than an outright sale.

A spokesman for IBM Middle East said the company has a policy of never commenting on rumours.

Last month, Gartner warned that a declining market for PCs globally would force further consolidation among the leading players. While this year and next year are tipped to be successful for PC makers, the industry will see a slump between 2006 and 2008 as corporate customers now look to upgrade every three or four years.

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