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Time takes a toll on Dell-IBM pacts

Dell Computer says that two major deals with Big Blue--one focused on components and the other on services--have essentially petered out, a result of a change in the tech climate.

Noting that times have changed, Dell Computer said it has pulled back from two major pacts with IBM.

In 1999, Dell signed two major deals with IBM. In March of that year, it signed an agreement to buy components such as disk drives and flat screens from Big Blue. In September, it announced a partnership to offer its customers computer-related services from IBM Global Services. Both deals were touted as multiyear initiatives, with the parts deal estimated to be worth $16 billion over seven years and the services pact pegged at $6 billion.

The components deal wound down as IBM stopped making many of the parts Dell once bought, such as flat-panel monitors and hard disk drives. On the services side, the two companies are working together on occasion, but not to the degree originally envisioned under the pact.

"We were in a considerably different market in 1999," Dell spokesman Bruce Anderson said on Tuesday.

Anderson said the computer maker has gradually gotten fewer and fewer components from IBM as Big Blue has sold off some of its businesses, such as its disk drive operation.

"The relationship has basically--over the last year--phased down to where it is no longer in effect," he said.

As for the services arrangement, Dell is still offering installation and onsite warranty services for its desktops, notebooks and other products through IBM Global Services, but generally only if customers specifically request to use IBM. Dell spokesman Jon Weisblatt said that the environment for services has changed and that customers are more focused on cost.

"IBM Global Services resulted in a higher cost than most customers were willing to pay," Weisblatt said. He added that Dell has a number of other services partners, including Electronic Data Systems and Unisys.

An IBM representative said IBM Global Services still has customers who are being provided with maintenance services for Dell products.

Dell representatives declined to say how much the company actually spent on components from IBM or how much the services deal ended up being worth. Weisblatt did say that the dollar amount of the services arrangement will fall short of the totals envisioned when IBM executive Samuel J. Palmisano and Dell vice chairman Kevin Rollins announced the deal back in 1999.

"Is it going to reach $6 billion, which is what we said at the time? No," Weisblatt said.