IBM will officially announce on Monday that Acer is manufacturing its PCs and that the two are also broadening their existing agreement to sell an array of each others products, in a deal valued at $8 billion over the next seven years.
The relationship between the Taiwan based hi-tech conglomerate and IBM has been a pure OEM deal to date, whereby Acer produced machines to IBM's design specifications. But the long standing arrangement was never announced publicly because, as an Acer America spokesman said on Friday: "Customers generally like to think that the company whose name is on a product actually made that product."
Acer, which under its own brand name is relatively successful in both the consumer and business markets in Europe, although less so in the US, also admits to other OEM deals, but would not name the buyers.
In Asia, however, the firm is a household name and was recently named the number one computer brand in a survey by Reader's Digest. Acer also claims to be world's third largest PC manufacturer and generated 1998 revenues of $6.7 billion.
Under the new arrangement with IBM, Acer will resell Big Blue's floppy and hard disk drives and gain access to some intellectual property, while IBM will resell Acer's monitors and other peripheral products.
Acer has also licensed other Big Blue intellectual property in the past. For example, in March 1998, its Acer Display Technology division signed an agreement with IBM to license its TFT-LCD (Thin Film Transistor Liquid Crystal Display) technology.
The aim was to develop the necessary manufacturing processes to produce high yields of LCDs driven by amorphous silicon thin film transistors for notebooks and large screen monitors.
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