Lenovo confirms talks to acquire IBM’s low-end server business

Lenovo on Tuesday confirmed that it is in talks to buy its way into the enterprise server market most likely via IBM. Various reports have indicated that IBM is looking to unload its low-end x86 business. Lenovo and IBM were in talks last year about a potential deal but couldn’t agree on price. As noted previously, IBM is looking to move up market and the x86 server business could ultimately suffer the same fate as the PC market amid cloud computing.

Lenovo Group Ltd’s talks to buy part of International Business Machines Corp’s  server business show the Chinese personal-computer giant’s next ambition: challenging U.S. rivals in the lucrative market for products and services aimed at corporate clients. Lenovo is still a minor player in enterprise servers, even though the company is now the world’s largest PC maker after it overtook Hewlett-Packard Co.  and Dell Inc. A deal with IBM could turn Lenovo into a competitive player in the roughly $50 billion server market. In the third quarter of last year, H-P was the world’s largest server vendor by revenue with a 28% share of the market, followed by IBM with 23% and Dell with 16%, according to research firm IDC.