IBM, the creator of the industry standard PC, is to stop making desktop computers, handing over production of Netvistas in US and Europe to Sanmina-SCI.

The OEM deal is worth $5bn over three years to Sanmina-SCI, a specialist electronics contract manufacturer, which is paying an undisclosed sum for IBM's Netvista manufacturing business, based in North Carolina and Greenock, Scotland.

IBM says the deal ensures that the company will make significant cost savings, while continuing to offer a full-line up of PC products and services.

So what does this mean? First, it puts paid to the persistent rumours that IBM is to exit the desktop PC business. After all, it is committed to spending $5 billion over three years on its new desktop PC supplier. If Sanmina-SCI can build PCs cheaper than IBM, then IBM can compete harder on price for corporate desktop PC accounts. If nothing else, the Netvista PC line is a useful weapon in IBM's arsenal of tech services and products for the corporate market.

Today, IBM told staff by email that it was to stop selling PCs direct by telephone to small and medium-sized businesses in the UK, Germany, Sweden and France. Telesales staff are to be redeployed to handle calls from enterprise customers, while small businesses will now be referred to IBM channel partners. You can read more at ZDNET UK, which got the scoop. ®

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