BM, Dell link sales, development
By James Coates
Tribune Computer Writer
International Business Machines Corp., the world's biggest computer company, on Thursday signed a seven-year, $16 billion technology sharing and joint marketing agreement with Dell Computer Corp., the world's hottest-performing computer seller.
It might be called a marriage of convenience between Big Blue, as IBM is known, and Little Blue (Dell, which copies IBM's color scheme in its own logo).
The first fruits of the mammoth deal, the two companies' officials promised, will be general availability to American consumers of some leading-edge IBM devices such as:
- Ultra high-speed copper-based microprocessors.
- Tiny, coin-sized, 340-megabyte hard drives.
- Home versions of Big Blue's highly coveted business computer monitors and flat panel displays.
However, the joining of the two icons of the information revolution promises to dramatically accelerate the time from lab bench to store shelves for much more new computer technology than just these few cited on signing day.
Until now, consumers had to wait until IBM-developed superproducts slowly made their way from the company's corporate pipeline into its often-troubled IBM PC company and then into the general market.
In the future, said those touting the deal, IBM's latest products will quickly reach the world by being incorporated into Dell's robustly selling home and office product lines and by being included in Dell's massive Internet shopping center, gigabuys.com, which went live earlier this month with more than 30,000 items for sale.
Both the deal with IBM and the opening of the massive gigabuys Web site were clear responses by Round Rock, Tex.-based Dell to its archrival, Houston-based Compaq Computer Corp.
In the past year, Compaq has acquired IBM's biggest competitor, Digital Equipment Corp., and acquired its own Web-based superstore, www.shopping.com, setting up a business model much like the Dell/IBM arrangement now will offer.
In its deal, Compaq gets access to Digital's substantial research establishment as well as its manufacturing resources for microprocessors, storage devices and other complex products.
Now Dell has many of the same assets through IBM. Investment analysts at Merrill Lynch reacted to Thursday's deal by noting that it will hurt both Compaq and Hewlett-Packard, which sells personal computers, printers, scanners and other consumer and business products along lines similar to those of Dell and Compaq.
IBM stock closed up $4.12 at $170.88 in New York Stock Exchange trading. Dell was up 94 cents to $81.88 on the Nasdaq.
Analysts such as Sam Albert, president of Sam Albert Associates, attended the Dell-IBM announcement and told reporters in New York the deal amounts to an effort by IBM to sell "the family jewels"--which the company often has trouble getting displayed to the world at large.
Dell, he noted, gets a chance to vastly improve its already impressive product line by adding technologies that competitors other than IBM lack.
These hot products, like IBM's new line of ultra-thin, flat panel liquid crystal color monitors mounted on goose neck stands and nicknamed Cobra, now will be offered along with the rest of Dell's product line, the two companies' representatives indicated.
Dell leads the industry in the direct marketing of personal computers, laptops, printers, scanners, monitors and other hardware through its www.dell.com Web site and aggressive sales to corporate customers.
But while it leads the world in selling the latest computer equipment in general circulation, Dell has heretofore lacked the resources to develop new products on its own, explained Mike Lambert, senior vice president, Dell Enterprise Systems Group.
"By more extensively pairing IBM's world-class technology with our own in systems brought to market through our efficient direct business model, we intend to enhance Dell's competitiveness in the global computer systems industry," he said.
With its enormous research and development assets, IBM has lacked the sort of pathway that Dell created to quickly move new products into the popular markets. That pathway put Dell on its way to becoming the country's largest seller of personal technology products.
Dell also will join forces with IBM for future product development.
Best of all for Big Blue, said IBM's James Vanderslice, chief of the IBM Technology Group, is that the company will be able to quickly market new products from its extensive research and development arm such as the coming "system on a chip" that will reduce an entire desktop computer onto a single wafer of IBM's new copper-enhanced silicon mixture. |
