IBM x86 up for sale?

Reports suggest that IBM is looking at selling its x86 server business and Lenovo is keen on buying, but not yet...

Lenovo, which bought IBM's PC business in 2004 for $1.25 bn, is now looking at upping its ante in the smartphone and server business - the 2 areas where it has very negligible presence.

Lenovo earlier this year was rumored to buy Canadian smartphone maker - BlackBerry.

Now going by various reports in the past few days, Lenovo is in intense discussions with IBM to buy full or part of IBM's System X (x86) server portfolio. While both companies had denied this rumor, but a latest report in Fortune says that the deal was stalled due to ‘valuation of the IBM's x86 business'. Initially some reports said that IBM demanded close to $6 bn and it was declined by Lenovo which was looking at sub $3 bn valuation.

Going by reports, at this point in time Lenovo has backed off, but many analysts predict that IBM will offload its x86 business eventually as increasingly the server hardware business for all vendors is getting squeezed by tight margins.

Clearly for IBM it looks like an ‘excess baggage', but some analysts also caution that x86 is a critical piece and doing away with that IBM will lose a critical hardware part and might lose the edge with HP and Dell-its key competitors in x86 and these 2 vendors are taking on to converged infrastructure in a big way.

Nevertheless, it's still too early days to speculate but going by numerous reports - all is not very well with IBM's x86 business and IBM will announce something strategic if not sell its x86 portfolio. Meanwhile on Lenovo's part getting IBM's x86 means a huge ramp up and it will give enough muscle to compete with Dell and HP.

What do you think - will Lenovo clinch this deal or does it make sense for IBM to sell its x86 business? Let's hear your views on this!