Just days after announcing a US$1.2 billion investment in cloud computing, comes news IBM is looking to sell its low-end server business.
The Wall Street Journal reports:
IBM is exploring a sale of its low-end server business, according to people familiar with the matter, reviving an effort that came close to yielding a deal last year.
Dell is named as a possible buyer.
Operating in the low-end server business is a thankless task. Margins are wafer thin and sales are falling as companies increasingly move workloads to the cloud. You don’t need so many servers when Google, Microsoft or other online services handle mail and documents.
Even when companies keep computing jobs in-house, virtualisation technology means they can cram more servers into a single box.
IBM, HP and Oracle all struggle to make money from servers, which makes you wonder why anyone would want to buy IBM’s low-end server operation. The low-end server business doesn’t even give access to a lucrative customer list. The only buyer I can see is someone who can consolidate the business with their own to win economies of scale.