Dell pulls out of supply deals with IBM

Dell pulls out of supply deals with IBM

Dell 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 $US16 billion component supply deal with IBM. In September 1999, that deal was followed by a services pact which had an estimated value of up to $US6 billion 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 $US2.05 billion. On the services side, Dell and IBM do still work together, but on a much smaller scale, according to Dell.

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

IBM said Dell's actions did not have a significant impact on its business.

"IBM's agreement with Dell was focused on HDDs and displays, two businesses that IBM has divested," an IBM spokesman in Europe, Roger Warner, said. "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,"

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