It Is What It Got
“What is absolutely key to this deal is that the buyer is Lenovo, the largest Chinese PC manufacturer. Yes, the division was unprofitable and IBM would have eventually had to do something about it, but Sam Palmisano wanted a Chinese buyer and was willing to accept far less cash than he might have received elsewhere just to get the buyer he wanted.
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.”