IBM Selling x86 Server Business, Buying SoftLayer Cloud (Again)?

Is IBM revisiting a potential x86 server business sale, and a potential SoftLayer cloud data center acquisition? Both rumors are back just as Memorial Day Weekend kicks off. Here's the update from The VAR Guy.

The VAR Guy

May 24, 2013

2 Min Read
Rumors about IBM39s x86 server business and data center focus emerge again
Rumors about IBM's x86 server business and data center focus emerge again.

Is IBM trying once again to sell its x86 server business, and revisiting a potential SoftLayer cloud data center buyout? Those rumors floated to the top of The VAR Guy’s email inbox right before the Memorial Day holiday weekend started. And we all know merger, acquisition and company sale discussions typically heat up over extended holiday weekends  — while the press and investors are off on vacation…

So is there anything to the rumors starting up again? The VAR Guy’s sources say the following:

1. x86 Server Business: The problem here remains valuation. As cloud computing continues to gain momentum, the value of IBM’s x86 server business potentially declines by the day. Lenovo remains interested in the server market, but valuation apparently was a stumbling block during earlier negotiations with IBM. Now The VAR Guy hears at least one private equity firm has inquired about IBM’s x86 server operations. The VAR Guy’s educated hunch: A potential sale here still does not sound imminent.

2. Buying SoftLayer?: Chatter about this deal also sounds far-fetched. IBM keeps claiming to have momentum with SmartCloud. But the company does not break out specific revenues for its cloud businesses — SaaS, hardware, software, etc. Meanwhile, even strong cloud data center providers like Rackspace face intense competition from Amazon Web Services. And Google Compute Engine just cut cloud prices — again.

Does IBM really want to explore buying more data centers when Infrastructure as a Service (IaaS) is becoming a commodity almost as fast at x86 servers?

Hmmm… The VAR Guy will continue to track both rumors over the extended holiday weekend — while riding roller coasters at Hershey Park. Special note to The VAR Guy’s valued tipsters: Thanks for the email about these two potential deals. Your identity — like The VAR Guy’s — remains safely hidden.

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