IBM pulls off another big components deal
IBM today announced another major distribution deal, this time with Bell Microproducts, that continues its efforts to boost revenue by selling components and systems for integration into other products.
"It's part of a big push to sell a lot of industry-leading technology that we have to the rest of the industry," said IBM spokesman James Sciales at the company's headquarters in Armonk, N.Y. "It could be everything as diverse as PC hard drives, LCDs, network controllers and different types of semiconductor products."
Wednesday's agreement with Bell, a San Jose, Calif., computer systems distributor with established business ties in North and South America, will generate more than $2 billion in sales over the next four years, company officials said.
The deal is the latest in a series of business agreements that have followed IBM's establishment of the Technology Group in October 1998. The group was formed to boost IBM revenue through the sales and licensing of IBM products and technology to other companies.
"In 1999 alone, we announced $30 billion worth of deals with OEM customers such as Dell, EMC, Acer, Nintendo, and Cisco," Sciales said.
IBM's win-win situation
IBM's strategy of selling products and technology to competitors puts the company in a win-win situation, Sciales said, enabling IBM to profit even from the sales of rival products.
As an example, he cited Apple Computer Inc.'s popular iBook notebook. "Many people don't realize that it contains a lot of IBM technology. It has the IBM PowerPC copper chip as its processor, it has an IBM hard drive and an IBM LCD," Sciales said.
Under the agreement with Bell, which has distributed IBM products since 1993, the company will market and distribute IBM semiconductor and computer products to PC manufacturers and value-added resellers and dealers.
The distributor will also offer a variety of services including testing, software loading, mass storage system integration and computer system integration.
"Our agreement with IBM represents a milestone in an emerging new distribution industry paradigm centered on providing solutions and not just components," said Don Bell, president and chief executive officer of Bell Microproducts, in a statement. "Our ability to deliver a broad range of value-added services will complement IBM's Technology Group product portfolio."
In other news today, IBM said it was selling three printed circuit board plants and assets worth about $500 million to Toronto-based Celestica Inc., which was spun off from IBM a little more than three years ago.
In addition to the three plants in Rochester, Minn., and Vimercate and Santa Palomba, both in Italy, Celestica will assume supervision over the 1,800 workers employed by the facilities.
Under the agreement, Celestica will assemble electronics and provide systems testing for IBM in a deal worth about $1.5 billion annually, Celestica officials said.
More information is available at www.ibm.com.