Once again, from ARSTechnica:


As IBM apparently intends to sell its PC (and laptop) business, some are speculating that the apparent divestiture of its PC business is the precursor of a bid by Big Blue for Apple. The theory is that the combination of IBM enterprise credibility and Apple's hardware and operating system would make such a partnership profitable. Apple's servers, desktops, and laptops would be given a foot in the door of the business world and -- along with Mac OS X -- would give IBM a complete, end-to-end solution to counter Microsoft. IBM would also get an instant winner in the consumer electronics market, as they would own the iPod as well as Apple's digital rights management solution, FairPlay.

Those arguing for an acquisition of Apple by IBM point to a few factors which on the surface, seem to point in the direction of a takeover. First, Apple is already heavily reliant on IBM technology. Their server line (Xserve) and most of their desktops (with the exception of the eMac) use IBM's PowerPC 970FX CPU. While the rest of Apple's computer product line currently uses Motorola CPUs, plans are to roll variants of the PPC 970 across the entire lineup, once it's technologically feasible. There could also be a resurrection of the old Apple-IBM-Motorola alliance -- remember, Apple is planning to bring iTunes to Motorola-branded cell phones some time in 2005.

Another selling point is the high margins Apple commands for its products, which would fit nicely into IBM's strategy. One of the reasons given for IBM getting out of the desktop and laptop markets is the utter commoditization of the PC. With Dell regularly selling desktops for under US$499 (and its recent blue-light special on laptops), margins are low and profits harder to come by. In contrast, Apple commands margins in excess of 25 percent on its computers, and over 20 percent on the iPod. Those are attractive numbers, but I doubt IBM would be able to maintain those figures if they planned on making a push into the enterprise with Apple hardware.

Even with those positives, an IBM play for Apple is highly unlikely. Not too long ago, when Apple's stock was trading in the mid-teens, it was a better target. That low stock price, combined with Apple's US$4 billion or so in cash reserves made it more attractive than it is now. With its stock trading in the US$60 range and its market cap currently over US$25 billion, it presents a more formidable target.

Despite the apparent synergies, the two corporate cultures aren't a good mix. Apple is known for its cutting-edge industrial design and its cool products. Cool, hip, and its other synonyms are rarely associated with IBM. Would an IBM-controlled Apple be able to continue coming up with creative, innovatively-designed products? Doubtful. And where would Steve Jobs, the driving force behind Apple's success, fit in? It is difficult to imagine him taking marching orders from IBM, and it is similarly hard to envision him running Big Blue.

More importantly, would IBM want to swap one set of headaches (its low-margin, decreasing market-share PC business) for another? Selling off the PC business positions IBM even more squarely in the business-to-business sector, with its focus on servers, CPUs, and services. Acquiring Apple would move it back into the business-to-consumer space that it seems dead set on exiting.

Even if IBM fetches well over US$2 billion for its desktop and laptop businesses, it will take a whole lot more than that to gain control of Apple. Bottom line? While the prospects of an IBM-Apple combination makes for interesting conversation, the likelihood of it happening is slim to none.