IBM And Dell Tighten Knot

IBM and Dell, already strategic bedfellows via a $16 billion technology pact announced last spring, curled up closer together today with a formal, $6 billion alliance in computer services. Under terms of the seven-year deal, IBM Global Services will offer installation, short- and long-term warranty service, and high-availability service (two- to four-hour response time) for large Dell corporate, education and government customers.

IBM and Dell, already strategic bedfellows via a $16 billion technology pact announced last spring, curled up closer together today with a formal, $6 billion alliance in computer services.

Under terms of the seven-year deal, IBM Global Services will offer installation, short- and long-term warranty service, and high-availability service (two- to four-hour response time) for large Dell corporate, education and government customers. The two companies expect the range of services on Dell PCs, workstations, network servers and data storage devices to broaden over the course of the agreement to possibly include consulting and systems integration.

The deal will kick off in the U.S. and expand into global markets next year. Sam Palmisano, the outgoing head of IBM Global Services, said at a Monday morning press conference that the agreement potentially adds 22,000 IBM field technicians in 160 territories to Dell's existing 3,600 global technicians. Palmisano added that IBM Global Services already supports about 40 million devices around the world..

Mike Daniels, general manager of product support services at IBM Global Services, added in an interview that the Dell pact was of a piece with IBM's recent alliance with Cisco.

"With fewer and fewer significant vendors in the product space, it's important for us to have alliances in place with the leaders," he noted.

Daniels conceded that installation and warranty service are not the kind of sexy, high-margin services normally craved by integrators, but he suggested that the Dell agreement holds much promise in more attractive segments like e-business.

"In the future, for example, we expect [the Dell deal] to leverage our investment in electronic customer care [remote diagnostics]...the need for high availability is going to require a digital value chain to intervene in the physical value chain."

Dell officials insisted that the formal pact with IBM would not compromise Dell's existing service alliances with Wang Global and Unisys. The IBM deal simply gives large accounts "an expanded choice of offerings," according to a Dell spokesman.

Today's agreement formalizes an existing relationship between IBM's global services arm and the direct PC vendor.

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