IBM Personal Systems Group
| Company type | Division |
|---|---|
| Industry | Personal computers |
| Predecessor | IBM Personal Computer Company |
| Founded | 1992 |
| Defunct | May 3, 2005 |
| Fate | Acquired by Lenovo |
| Successor | Lenovo PC division |
| Headquarters | Armonk, New York , United States |
| Parent | IBM |
The acquisition of IBM's Personal Systems Group, the division responsible for its PC operations, by Lenovo was announced on December 7, 2004, and finalized on May 3, 2005.
Background
In September 1992, facing a significant decline in profit margins due to fierce pricing competition in the PC market, IBM restructured by consolidating its personal computer manufacturing units outside of the mainframe and midrange sectors into a separate entity named the IBM Personal Computer Company (IBM PC Co.). This reorganization was among the most extensive corporate transformations of that era. By 1993, IBM PC Co. had divided into several segments, including Ambra Computer Corporation and the IBM Power Personal Systems Group, which focused on clone PCs and PowerPC workstation products respectively.
In 1998, IBM combined its enterprise-oriented Personal Systems Group with its Global Services division responsible for PC consulting and customer support to create a single unit called IBM Personal Systems Group. By 1999, after losing retail market share to competitors such as Compaq and Dell, IBM exited retail PC sales altogether and dissolved the IBM PC Co., integrating it fully into the Personal Systems Group.
On September 14, 2004, LG Corporation and IBM declared they would terminate their South Korean PC joint venture by the end of that year. This decision was unrelated to prior bribery accusations. The partnership had produced LG's Xnote laptop series, which LG continued to market independently starting in 2012.
Acquisition
On December 7, 2004, Lenovo, a Chinese technology company, revealed plans to acquire IBM's Personal Systems Group through an all-stock transaction valued at $1.3 billion. After initial concerns regarding national security in early 2005, approval was granted by both the Committee on Foreign Investment in the United States and the United States Department of Justice, allowing the acquisition to close on May 3, 2005. Following the transaction, Lenovo relocated its global headquarters from Beijing to New York City. By 2009, all Think-branded products were transitioned to carry the Lenovo name.
Beginning in 2006, Lenovo started reducing its association with the IBM brand. In 2007, IBM divested $85 million worth of Lenovo shares. That December, Lenovo staff took part in "Lenovo Pride Day," during which they replaced IBM labels on their devices with Lenovo branding.
Further developments
In 2014, Lenovo expanded its enterprise hardware offerings by purchasing IBM’s x86-based server division (System x) for .
Initially skeptical about this acquisition’s prospects due to concerns that essential personnel might remain at IBM, PC Mag columnist Tim Bajarin later commended Lenovo for successfully integrating the business.
When preparing to step down as CEO in 2011, Samuel J. Palmisano expressed in a New York Times interview his preference for Lenovo over Dell and private equity firms for strategic reasons. He highlighted how the deal supported China’s ambition to globalize its companies while enhancing IBM’s footprint within the Chinese market.
See also
- List of mergers and acquisitions by IBM
- Acquisition of Sun Microsystems by Oracle Corporation
- Acquisition of Activision Blizzard by Microsoft