So, are they still selling POWER/PowerPC servers? Would this product line be affected?
The offload of the x-series business is most likely due to the fact that IBM can't compete on price with the volumes which HP & Dell shift. IBM have no real USP on X86 as enterprise are now mostly putting ESX, Xen or Openstack on them, IBM have no potential license or service fees generation.
It seems a sound business decision to me.
Didn't the american car companies take that route too? And steel mills. and... mainframes I think.
Then Lenovo puts a few more coins into R&D and takes the midrange. Which IBM gladly gives up because the margins aren't high enough...
This has happened more than a few times across several industries - American cars, Japanese electronics, mainframe/mini/microcomputers, etc.
EDIT: Also see apricot computer. Which did the /exact/ same thing - outsourced the production of it's "commodity" computers, losing its special sauce, and lucrative service contracts. It was gone in a flash. Sir John Harvey-Jones even did an episode of the UK show "the troubleshooter" on them. It's a sure way to make a quick buck this quarter, but horrible long term.
If they were making a lot of revenue (not even profits!) off their value-adding, and this value-adding could be applied to their top-end stuff (thus amortised across a larger base), it would make sense.
I'm not an expert in IBM servers, but I don't think they are getting a lot of revenue at the bottom-end as a result of their bells and whistles, and it's probably not that easy to transfer those enhancements to their top-end servers.