IBM Lenovo deal involves Chinese Linux trade off

THE DEAL in which IBM has effectively ceded its notebook and desktop PC business to Chinese maker Lenovo was given official US government approval here today.

But we're hearing interesting rumours that there's far more to this deal than meets the eye and it's far from being a straightforward transaction.

Lenovo, formerly owned by Legend, is partly owned by the Chinese government. In fact, the Chinese government owns 57% of the firm. The acquisition of the IBM business looks like a big win in terms of face for Lenova, and for the Chinese.

But we understand that there's a quid pro quo to the deal which doesn't involve PCs except peripherally, and is more to do with IBM's interest in being a giant Linux player. The sources claim that IBM has been actively lobbying the Chinese government so that it will be a key player in the development of Linux and server infrastructure throughout the vast and fast developing nation. Power.org is a wonderful thing.

IBM's PC division hasn't exactly been a ray of profitable sunshine over the last four years - such an exchange for Big Blue would offer it a golden key which would eventually mean a rich harvest for the US player.

If the sources are correct, that poses another interesting question. Can IBM conduct such a deal with the notoriously tricky Chinese government that eventually rebounds to its benefit, rather than to the PRC? While IBM has a long view of the market, we rather suspect that the PRC's view is more farsighted, and its goals and strategies include Big Blue as a bit player, rather than an Emperor of IT in the future.