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IBM, Dell extend pact by $6 billion

IBM and Dell Computer expanded their partnership today in a multibillion-dollar deal to make IBM Global Services a provider of services to Dell customers.

IBM and Dell Computer expanded their partnership today in a multibillion-dollar deal to make IBM Global Services a provider of computer-related services to Dell customers.

Although terms of the agreement were not disclosed, the companies said the pact could be worth $6 billion over seven years. In March, IBM and Dell announced a $16 billion agreement that called for Dell to buy Big Blue's storage, microelectronics, networking, and display technology for its personal computers.

The companies said that today's agreement pairs the complementary capabilities of the world's leading direct computer-systems company with the largest provider of information-technology services. This strategic agreement also formalizes and expands the scope of a pre-existing services relationship between the two companies. The technology contract gives Dell broad access to components based on IBM's leading technology.

Dell plans to start offering by early next year its U.S. corporate, government and education customers a range of installation and onsite warranty services from IBM Global Services for its desktops, notebooks, workstations, network servers, and data-storage products.

"We really do think that by the combination of strength of the direct marketing model that Dell has and our incredible reach and breadth [of services], it's a great deal for companies and a great deal for our customers," said IBM Global Services senior vice president Samuel J. Palmisano at a press conference. "This agreement will help ensure that Dell's customers' products are up, running, and operating at peak efficiency."

Dell plans to continue its global service relationships with Unisys and GetronicsWang.

"[Today's pact] does not necessarily impact the existing ones. We continue to have to Unisys and GetronicsWang as service partners," said Dell vice chairman Kevin Rollins at the conference. "What this does allow us to do is to expand and offer customer choice."

Shares of IBM edged 1.4 percent higher, or 1.75 points, to 126.75 in early trading, while Dell rose 2.58 percent, or 1.13 points, to 44.81.

Rollins said the pact will target large global roll-outs and installation of hardware solutions; service for Dell's basic and extended warranties. The partnership will also expand quick response time services.

"We expect this partnership to evolve over time to include other services and opportunity globally," said Rollins.

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