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IBM-Dell deal may presage other pacts

Today's announcement may be the first of a number of deals under an alliance which could change the competitive landscape in the PC arena.

The IBM-Dell deal announced today may be the first of a number of deals under an alliance that could change the competitive landscape in the PC arena.

In the future, IBM and Dell Computer may cut a deal under which IBM provides computer services to Dell customers, according to industry sources familiar with agreement announced today. Today's broad tie-up calls for Dell to purchase $16 billion dollars worth of hardware over the next seven years.

"This is a test to see if [Dell and IBM] can put together a services deal," one source said.

"This is intended as a framework" for possible future deals, the source added. "Dell is good at tactical stuff, but IBM can offer service at a higher a level."

The two are also considering more specific tie-ups on joint hardware products, according to sources.

IBM has one of the largest service and support organizations of any computing company in the world, offering everything from high-end consulting to computer repair. It is also one of IBM's more profitable divisions.

Conversely, Dell lacks a large services division. Instead, it relies on a series of companies, such as Unisys, to provide maintenance, networking services, and consulting to customers. Dell's primary service provider was Digital, until the company was bought by Compaq Computer last year.

Companies that manufacture personal computers are striving to create new business models that either capitalize on economies of scale or derive revenue from areas other than PC systems, which are quickly becoming low-cost commodities.

Earlier this week, another leading PC maker, Hewlett-Packard, announced on Tuesday that it will split into two separate entities.