Dell Looking to Purchase IBM's Low-End x86 Server Business

Despite selling its personal computer business to Lenovo in 2005, IBM has been keeping its hands on at least one aspect of the low-margin x86 market that it once dominated with its lineup of low-end x86 server computers. But now that may be about to change, according to a new report by the Wall Street Journal sourcing “people familiar with the matter.” According to the report, IBM is in talks with numerous companies to unload their x86 server business, the largest of the bunch being none other than Dell.

This isn’t the first time IBM has talked to potential suitors about its x86 server lineup though.  In fact, just a couple of months ago, IBM was in talks with Lenovo to sell off its x86 server business, however IBM backed out at the last minute after Lenovo offered what IBM considered a a low ball price of $2.5 billion for the business. According to estimates by Morgan Stanley, IBM’s lineup of x86 servers brought in over $4 billion in profits in 2012.

Since leaving the personal computer market in 2005, IBM has been working on various other products. The company supplies the PowerPC-based processors used to power most of the last-generation video game consoles on the market, including the Nintendo Wii, the Microsoft Xbox 360, and the Sony PlayStation 3, as well as the current-generation Wii U console; the other current generation consoles, the Xbox One and the PlayStation 4, have switched to using AMD provided x86 processors.

IBM has also worked on development of Watson, one of the world’s first artificial intelligence computers capable of “learning” new functionality. Watson famously went on to win two rounds of Sony Picture’s Jeopardy trivia game show program in 2011, beating two human opponents.