IBM and Dell tighten ties with $6B services deal

NEW YORK -- Dell Computer Corp. and IBM said today that IBM Global Services will provide worldwide service for Dell hardware in a deal valued at $6 billion over seven years.

NEW YORK -- Dell Computer Corp. and IBM said today that IBM Global Services will provide worldwide service for Dell hardware in a deal valued at $6 billion over seven years.

The arrangement makes Dell one of IBM's biggest customers and builds on the $16 billion technology deal the pair announced in March.

IBM will begin offering services to Dell's corporate, government and education customers early next year. Initially, the services will be basic packages such as installation, warranty service and 2- to 4-hour response time for onsite service. But an IBM executive said the deal will likely evolve to include other services.

Just the start?

"We're doing things like asset management for other large customers, and that could apply here," said Sam Palmisano, senior vice president and group executive of IGS, at a press conference here. "There will be further expansion of the deal" beyond what was announced, he said.

The deal covers desktops, portables, workstations, servers and storage. No mention was made about large-scale software or network integration, which has been a weak spot in Dell's services portfolio.

Palmisano hinted that the deal could eventually cover Web hosting, an area where IBM already has 8,000 customers.

"Nobody has our scalability and capability," he said.

The IBM deal means that GetronicsWang and Unisys Corp., which already provide service to Dell customers, may lose some business to IBM. However, Kevin Rollins, vice chairman at Dell, downplayed the impact on their businesses.

"This offers customers more choice and just adds to our portfolio," Rollins said.

With Monday's announcement, Dell commits a bare minimum of $22 billion to IBM in products and services over seven years.

For Palmisano, today may have been his swan song as chief of the $28 billion Global Services group. On Friday, he officially starts his job as head of the IBM server group, whose revenues have been in a slow but steady decline.

"It will be a very challenging assignment," Palmisano said.

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