The end of 2004 saw more than its share of corporate wheeling and dealing, with three particularly significant moves involving major IT players like IBM, Oracle and Symantec taking place in the month of December alone. Experts are predicting these business realignments are harbingers of things to come in the IT industry during the next few years (see the “IT Predictions for 2005, Part One” story in this newsletter).
IBM, which released the first PC in 1981, announced on Dec. 8 that it sold its computer manufacturing division to Lenovo, a Chinese-based company, for $1.75 billion. The Big Blue will maintain an 18.9 percent share in the jointly held enterprise, as well as its eServer x86 PC servers. Lenovo, the largest computer producer in Asia, also will be IBM’s preferred supplier and has the right to use the brand name for the next five years.
Figures from research firm Gartner Inc. show that IBM held a 5 percent share of the global PC market last year. This move cements IBM’s conversion from a leader in computer hardware development and production to a major player in software and IT services. About 10,000 IBM employees—nearly 25 percent of whom are in the United States—will be transferred to Lenovo, more than doubling that company’s 9,000-person workforce.
Enterprise software provider PeopleSoft was bought by Oracle on Dec. 13 for $10.3 billion, the culmination of an 18-month effort on the part of the latter. Oracle officials said the company acquired PeopleSoft in order to compete with rivals such as Microsoft and SAP. In fact, the merger makes Oracle the second-largest corporate application software manufacturer in the world, behind SAP (Oracle is currently the largest database software provider).
Finally, in a transaction valued at approximately $13.5 billion, IT security company Symantec and storage software firm VERITAS merged on Dec. 15. The combined company, to retain the Symantec name, is expected to substantially increase revenue and create an organization with significantly more financial scale and resources. Through the coalescence of leading network security, anti-virus, backup and storage applications, the new Symantec may well be the immediate leader in the data protection market when the mega-deal closes in the second quarter of this year.