To: stock bull who wrote (107054 ) 3/4/1999 12:36:00 PM From: Mohan Marette Read Replies (2) | Respond to
Dissecting DELL/IBM deal----->Making beautiful music together...>The deal "allows IBM to have valued-added technology," said Amir Ahari, analyst at IDC Corp, a key point in as average selling prices of PC edge lower. New OEM business the deal is new business, albeit incremental. As a rear-loaded deal, IBM will see the bulk of the business by the seventh year. The company would not say how much of that business would be realized in the first year. Doing a back-of-the-envelope calculation, this would mean an average of some $2 billion a year in business, or 33 percent of IBM's current business $6.6 billion OEM business. Dell will ramp up its purchases from IBM "five to tenfold" over the life of the aggreement, Mike Lambert, senior vice president in the Enterprise Group, told CBS.MarketWatch.com. IBM does not breakout its OEM business partners, but given the five to tenfold increase, it appears Dell accounts for some 5 percent of IBM's current OEM business. Dell discount? "This is bringing together two good companies... Any collaboration is a win-win for both," said Joseph Hosler, an analyst at Independence Investment Associates in Boston. The question remains what type of price discounts does Dell get with the long-term purchasing aggreement. The pact isn't likely to change his perception of the two companies' strategies going forward, Hosler said, calling it an "enhancement of what they already have." Dell said pairing IBM and Dell's technology with Dell's direct selling model will "enhance Dell's competitiveness in the global computer industry." Chip components At first, the pact grants Dell access to IBM's high capacity disk drives, network adapter cards, flat panel displays and some custom chips, including high performance static random access memory (SRAM) chips. cbs.marketwatch.com
