IBM unveiled a multi-billion services coup today, with the signing of a $6 billion deal to provide services to Dell customers.
Under the terms of the seven year deal, IBM Global Services will provide warranty and on-site support to Dell customers globally from 2000.
The contract is an extension of a seven year, $16 billion technology alliance which the two companies signed in May for IBM to supply a range of components to Dell.
While Dell has not yet terminated its existing services contracts with Unisys and Wang, the announcement calls the future of these relationships into question.
IDC's European expertise centre manager Andrew Milroy said Dell's success in the corporate market had forced it to search for a top tier service partner.
"Dell doesn't focus on services but now that their PCs are being sold to big companies, they're looking for partners to carry out [this work]," Milroy said. "It helps them to get taken seriously by large enterprise customers."
The deal was unlikely to harm IBM's own hardware sales, as many customers perceived that the quality of its products was higher, Milroy said.
"A lot of companies still have an IBM policy," he said.
Meta Group program director Mark Raphael agreed that the deal reflected Dell's recent success in the corporate market.
"This reflects Dell's success, particularly on the server side," Raphael said. "This deal also reflects the extent to which IBM has changed into a services company and is really breaking down the barriers of vendor competition."
"It's a classic example of two companies that are going to leverage [each other]. Dell thrives on a low cost model and they can't afford to invest in a new services model," he said.
The IBM relationship would also help Dell break into the corporate markets of new countries such as Denmark and Israel, Raphael added.
However, the deal does fly somewhat in the face of IBM's stated strategy in the past to use its services capability as a differentiator to compete with lower cost rivals, chiefly Dell. It will no longer be able to make this claim in Dell's case.
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