Certain names and products go hand in glove. Like, say, IBM
For a base price of $1,565, you got an Intel
Compaq Computer, now part of Hewlett-Packard
IBM's pricing strategy worked against it and opened the market for powerful, lower-priced PCs, which, over the years, dominated the market.
As Fool writer Seth Jayson reported last week, the rumor mill was churning that IBM would sell its PC business. The company made it official last night when it announced that Lenovo Group, China's leading PC manufacturer, would buy the business for approximately $1.75 billion.
So, what does it all mean? IBM says it will be free to focus on the business client. Really? IBM was selling PCs mostly to business clients! The reality is that $9 billion in sales (roughly 10% of total sales) is being jettisoned at an extremely low price-to-sales ratio because it was producing red ink and IBM has no critical mass to turn that situation around.
The tombstone on the IBM PC business will read, "We created the market and got buried by the competition." But the winners in this deal are IBM, Motley Fool Stock Advisor recommendation Dell
Fool contributor W.D. Crotty, an application software consultant, does not own stock in any of the companies mentioned, but he did write this article on a Dell computer.