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This week in IBM news

Big Blue tips the balance of power by essentially bowing out of the PC business, handing the reins to China's Lenovo.

IBM, the company that helped usher in the age of the personal computer nearly 25 years ago, stunned the tech world with the announcement that it would largely be bowing out of the business.

Big Blue plans to sell its PC division to China-based Lenovo Group and take a minority stake in the former rival in a deal valued at $1.75 billion. The two companies plan to form a complex joint venture that will make Lenovo the third-largest PC maker in the world, behind Dell and Hewlett-Packard.

Lenovo will be the preferred supplier of PCs to IBM and will be allowed to use the IBM brand for five years under an agreement that includes the "Think" brand. Big Blue has promised to support the PC maker with marketing and via its IBM corporate sales force.

Sam Palmisano, chief executive of IBM, felt that the company had simply grown apart from the PC industry. In a memo distributed to IBM employees and reviewed by CNET News.com, Palmisano explained that Big Blue's strategy to concentrate on so-called on-demand computing had become incompatible with running a PC business.

"IBM is an innovation company," he wrote. "It's why we have invested billions of dollars in recent years to strengthen our capabilities in hardware, software, services and core technologies focused on transforming the enterprise."

Stephen Ward, general manager of IBM's Personal Systems Group, has been anointed the future CEO of China's Lenovo. Ward took some time out to discuss the early aims of the "new Lenovo" and its role in the PC market in the United States, China and parts in-between.

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