Dell pulls out of supply deals with IBM

Dell Computer Corp. has pulled out of two major supply deals signed in 1999 with IBM Corp., because of changes in the business environment, Dell confirmed Wednesday.

Dell of Round Rock, Texas, in March 1999 signed a component supply deal with Armonk, New York, IBM then valued at US$16 billion. That deal was followed by a services pact reached in Sept. 1999, with an estimated value of up to US$6 billion over seven years to 2006.

The components deal, which called for Dell to buy storage hardware, displays and other products from IBM, became defunct as IBM sold many of these businesses, a Dell spokesman in Europe said. For example, IBM sold its hard disk drive (HDD) unit to Hitachi Ltd. last year for $2.05 billion. On the services side, Dell and IBM do still work together, but on a much smaller scale, the spokesman in Europe said.

"Parts of the agreements changed as business progressed. The deals did not get fulfilled the way they were expected to," the Dell spokesman said.

IBM said Dell's actions don't have a significant impact on IBM's business.

"IBM's agreement with Dell was focused on HDDs and displays, two businesses that IBM has divested. On the services side, our relationship continues -- we are still a services provider for customers that request IBM to handle the maintenance services for Dell products. As a result, there is no impact to IBM revenues," Roger Warner, an IBM spokesman in Europe said.

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