Dell, IBM cut new deal

Dell Computer Corp.'s $6 billion services deal with IBM Global Services may buttress Dell's back end, but so far its corporate customers are giving the move mixed reviews.

Under terms of the seven-year deal, which was announced last week, IBM Global Services will provide installation, warranty and on-site support services for Dell customers, beginning early next year in the United States and expanding globally thereafter.

The agreement, which builds upon a previous deal, covers services on desktops, portables, workstations and servers. But it will likely evolve to include other services, such as performance and network management, said Tom Conway, director of product support services at IBM, in Somers, N.Y.

Reaction from some of Dell's larger customers was varied. Some, like Brian Steele, IS manager at Citgo Petroleum Corp., in Tulsa, Okla., said the pact may work to their advantage. Citgo currently uses IBM Global Services support for its Netfinity servers. Under the new deal, Citgo could consolidate Dell desktops and laptops into that service contract, Steele said.

"We definitely weren't happy with [GetronicsWang]," which, along with Unisys Corp., provides services for Dell, Steele said.

Others said their chief concern was who to call when problems arise. "The critical piece is that you have the single point of contact [for service]," said Ken Baker, user support manager at Hewitt Associates LLC, in Lincolnshire, Ill., which has 1,300 Dell desktops. "If we're having a service issue in Indonesia, I want Dell to fix it."

Dell, of Round Rock, Texas, is using IBM to fill a hole in its services strategy and to build confidence among its enterprise customers, officials there said.

The deal also means that Get ron icsWang (formerly Wang Global) and Unisys, which currently supply installation and warranty service for Dell, stand to lose business to IBM. Neither company would say how much they currently make from Dell.

Doug Chandler, an analyst at International Data Corp., in Framingham, Mass., said Dell is clearly making IBM its service provider of choice. "It would seem to indicate that [Wang and Unisys] were not meeting all of Dell's needs," Chandler said.

Officials from Getronics Wang and Unisys downplayed the financial impact, saying there is enough Dell services work to go around. "I think it will be less revenue growth, but there won't be revenue loss," said Dave Goulden, director of North American operations for Getronics Wang, in Billerica, Mass.

Dave Drechsel, director of Unisys' global channel sales, said he wasn't worried about being shut out, noting that the Blue Bell, Pa., company has provided services for Dell the past 18 months.

Dell and IBM's latest deal

What each side gets:

Dell

• Broader global enterprise services for customers
• Access to thousands of IBM service technicians and professionals
• Leverage into other areas of IBM as it becomes one of IBM's largest customers

IBM

• Opportunity to generate huge revenues from Dell customers
• $6 billion