Dell pulls out of supply deals with IBM

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Dell pulls out of supply deals with IBM

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

In March 1999, Dell signed a component supply deal with IBM then valued at $16bn (£9.9bn). That deal was followed by a services pact reached in September 1999 with an estimated value of up to $6bn (£3.7bn) 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 said.

For example, IBM sold its hard disk drive (HDD) unit to Hitachi last year for $2.05bn. On the services side, Dell and IBM do still work together, but on a much smaller scale.

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

IBM said Dell's actions would not 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," an IBM spokesman said.


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