<p>IBM has announced the sale of Big Blue's x86 server division to Chinese manufacturer Lenovo, thus terminating IBM's long-running relationship (and one-time rivalry) with Intel and freeing the company to further focus on its software and service divisions. The deal only covers IBM's x86 server business; the company will retain control of its own Power-based servers and hardware (which still make a boat load of cash). Its research and development arm should be unaffected.</p><p>It's only been a year since IBM was posting record gains in sever market share, but those gains have been obliterated by significant drop-offs in x86 server revenue. According to IBM's Q4 transcript, revenue fell $750M in Q4 from hardware sales, and $1.7B year on year. Not all that decline is attributed to x86 System z sales were hit as well but it's a hard hit for the company.</p><p>Thus, IBM is doing in servers what it did years ago in desktops and laptops getting out, rather than attempting to compete on margins. This chart is from last September, but it shows the stark contrast between the non-x86 server market (where IBM dominates) and the x86 market, where it's a niche player.</p><p>As for Lenovo, buying IBM's server business fits neatly with the company's efforts to expand its own product base. ThinkPad was an excellent purchase for the Chinese company (also acquired from IBM), and while its greatly expanded (and some wouwld argue, diluted) the original ThinkPad branding, it still maintains multiple SKUs with "classic" ThinkPad styling. The company undoubtedly hopes to use IBM's server division to similar good effect, inheriting the customers and brand halo while working to create its own new products.Is the server market headed for commoditization?</p><p><a href="http://www.extremetech.com/computing/175299-ibm-leaves-the-x86-market-at-long-last-signalling-the-end-of-x86s-profitability">Keep reading...</a></p><p>Read also:</p><p><a href="http://www.bloomberg.com/news/2014-01-24/lenovo-said-to-have-beaten-fujitsu-to-ibm-deal-after-dell-passed.html">Lenovo Said to Beat Fujitsu to IBM Servers After Dell Passed</a> (Bloomberg)</p><p><a href="http://www.forbes.com/sites/maggiemcgrath/2014/01/23/lenovo-buying-ibm-server-business-for-2-3-billion/">Lenovo Buying IBM Server Business For $ 2.3 Billion</a> (Forbes)</p><p><a href="http://www.infoworld.com/t/servers/lenovo-buying-ibms-low-end-servers-and-its-customers-234865">Lenovo is buying IBM's low-end servers -- and its customers</a> (InfoWorld)</p><p>Explore: <a href="http://news.google.com/news/more?ncl=dsIWpHk9sT7IZxM6mXhD9RxHQPCmM&authuser=0&ned=us">494 additional articles.</a></p>
