WinInfo Daily UPDATE, December 8, 2004

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In the News

- IBM Sells PC Business in Blockbuster Deal
- Microsoft Ships Windows x64 RCs

==== In the News ====

by Paul Thurrott, [email protected]

IBM Sells PC Business in Blockbuster Deal

As expected, IBM announced late yesterday that it will sell its PC business--including its Think lines of desktop and notebook computers--to China-based Lenovo Group for $1.75 billion in cash, stock, and debt. IBM will take an 18.9 percent stake in Lenovo, which will open new US headquarters for the business in New York. Despite making what is clearly a hasty exodus from a commoditized PC business that IBM created more than 20 years ago, executives from the computer giant remain positive about the deal.
"Today's announcement further strengthens IBM's ability to capture the highest-value opportunities in a rapidly changing information technology industry," IBM Chairman and CEO Samuel J. Palmisano said. "Over the past several years, we have aggressively repositioned IBM to be the world's leading provider of innovation-enabled solutions for businesses and institutions of all sizes, in all industries. At the same time, the PC segment of the industry continues to take on characteristics of the home and consumer electronics industry, which favors enormous economies of scale and a focus on individual users and buyers. Today's announcement further strengthens IBM's focus on the enterprise, while creating a new global business that is better positioned to capture the opportunities in the PC industry going forward. We have worked very carefully with Lenovo to put in place all the elements of a strong, successful, enduring global alliance. IBM will continue to provide our clients with outstanding IBM- and Think-branded PCs through our alliance."
With the deal in place, Lenovo becomes the world's third-largest PC maker, behind Dell and HP. Lenovo retains the rights to use the IBM name and brands for the next 5 years and will retain the 10,000 IBM employees--many based in Raleigh, North Carolina--who design and develop IBM's PCs and notebooks. IBM will continue to handle technical support and warranty coverage for its former PC business.
IBM's decision to bail from the PC market might be just one of many such changes in the PC industry (the first, arguably, was Compaq's merger with HP). Although PC makers such as Dell and HP arguably benefit from IBM's departure, things aren't so rosy at number-two PC maker HP, which has been wracked with operational complexities since its merger with Compaq.
This week, HP CEO Carly Fiorina admitted to financial analysts that the company's board voted three times about whether to break up the company but decided each time not to do so. Some people within HP feel that the company's consumer and business organizations should be split into two companies. And although its printer business accounts for 30 percent of HP sales, the business generated more than 80 percent of the company's profits last year. Clearly, other parts of HP are dragging down the profitable bits, and debates continue to rage, both within and outside the company, about the merits of maintaining the company's current size and complexity.

Microsoft Ships Windows x64 RCs

Yesterday, Microsoft issued release candidate (RC) builds for the x64 versions of Windows Server 2003 and Windows XP; both builds are scheduled for release in the first half of 2005. Microsoft declared build 1289 of Windows 2003 x64 Edition and XP Professional x64 Edition as RC1 on Monday.
In recent briefings with Microsoft, executives from the software giant have been effusive in their praise of the x64 platform, which provides 64-bit capabilities, better performance, and complete compatibility with the 32-bit x86 platform that today's PCs use. One highlight? of the x64 platform, they say, is that, unlike the Itanium, x64 provides full 32-bit application compatibility and performance, giving customers the best of both worlds.
"Whenever we do performance testing, we run \[various\] industry-standard tests on the previous operating system on the same piece of hardware \[as the x64 OS\]," Iain McDonald, a Microsoft group program manager, told me recently. "Our goal was that customers could move to x64 without seeing a penalty in 32-bit application performance. We wanted to eliminate any sort of adoption barrier. We believe we've actually nailed it. The key is that there are some architectural benefits to x64 ... so 32-bit applications run at parity, or better, on x64 \[platforms\] than they do on x86."
Another huge advantage of x64 is that it finally shatters the 4GB memory model that 32-bit systems use, letting native 64-bit applications access stunning amounts of RAM. However, even 32-bit applications benefit from this situation when running on x64. McDonald told me that each 32-bit application gets a full 4GB of virtual address space when executing on x64 platforms, up from 2GB on 32-bit systems.
Unlike the recently released 32-bit version of Windows 2003 Service Pack 1 (SP1), the beta releases of Windows 2003 x64 Edition and XP Pro x64 Edition are currently available only to beta testers. However, Microsoft tells me that it will ship the build to Microsoft Developer Network (MSDN) customers and others within the month. Both products are functionally similar to the latest 32-bit versions of each product. So, for example, the x64 version of XP will be almost identical to 32-bit XP SP2, whereas the x64 versions of Windows 2003 will include the feature set from Windows 2003 SP1.

==== Announcement ====

(from Windows IT Pro and its partners)

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