IBM-Lenovo A Good Deal? Some Say Yea, Some Say Nay

"Down the line, Dell is winner-take-all," said one Wall Street analyst.

Another Wall Street investor who worked at IBM for 20 years and asked not to be named, agreed. "It's also good for Dell," the analyst said.

Also ominous for companies playing in the intensely competitive PC business are recently released industry predictions for 2005 from the Gartner Group. As part of its 2005 predictions, Gartner analysts said that by 2007, three of the Top 10 PC vendors will exit the market.

The former IBM employee also applauded Big Blue for selling its PC business to Lenovo. "It was very strategic," the analyst said. "They are letting Lenovo do all the heavy lifting while they chase high-growth, high-margin opportunities in services."

Still, one financial analyst thought the Armonk, N.Y., technology giant could be making a mistake by distancing itself from PC business.

"I think the PC business is a business IBM should keep," said Jay Arnold, a small-cap portfolio manager at Abacus Asset Management, Westport, Conn. "I think it could be a mistake. PCs are a very small part of IBM's business. They could give them away if they wanted," he said.

"Even Dell doesn't make money on everything they sell," Arnold said. And sometimes you have to do that. Without PCs, IBM may lose sales on other product lines. Sometimes you have to have PCs so you have a full-service line."