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Ex-IBM CEO revisits selling PC business

Ex-IBM CEO revisits selling PC business


Recently-retired CEO of IBM Samuel Palmisano discussed the selling of its PC business to Lenovo back in 2004.

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In this New York Times article, recently-retired CEO of IBM Samuel J. Palmisano shed light on why the company sold off its immensely successful PC division. Soon after taking over as CEO, Palmisano determined that IBM's personal computing business would have minimal room for innovation, so he decided to sell. This caused fervent internal debate mainly because its PC division was still profitable at the time. However, IBM indeed sold the branch to Lenovo in 2004. Palmisano says that despite offers from Dell and private equity firms, IBM chose selling to Lenovo because of its location in China, which helped IBM establish itself within the country's lucrative market.

HP, the world's largest computer company, attempted to mimic IBM's strategy (of ditching its personal computer division and expanding in other areas of innovation) recently, when it considered spinning off its PC business. But that was short lived, as HP reversed the decision just a few months later. The company has surely seen better days — and who can forget about HP wasting billions on Palm and webOS? Although Palmisano didn't discuss HP's more recent woes, he did comment on HP's Compaq purchase back in 2001: "You see the choice that was made, and how the economics worked out."

It seems that, at least for IBM, stepping away from the PC business was the right decision. Although that has positioned IBM as primarily an enterprise customer, the company has more recently found ways to get back into the general consumer limelight with projects like Watson. Palmisano says IBM founders "always defined IBM as a company that did more than sell computers." Given Palmisano's decision to stop selling PCs altogether, we'd say that's more true now than ever.