Dell's Dutch Ding Dong

Dell and Royal Philips go for the nuclear option. A sensible move

February 23, 2006

1 Min Read
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11:00 AM -- Dell is the latest big-name vendor to see a major deal evaporate, as reports emerge that the firms $700 million, five-year deal with Dutch manufacturing giant Royal Philips Electronics has bitten the dust just one year after its launch.

Clearly there are major hurdles in the path of this arrangement, and someone, somewhere, has taken the bold move to cut their losses before things spiral out of control.

Their initiative is laudable. To reach an impasse so early in the deal may raise eyebrows, but both Dell and Royal Philips are doing the sensible thing. Ending the deal now is clearly a blow to Dell’s ambitions in the services space, but it's far easier than unraveling things acrimoniously later on.

Witness the conclusion to IBM’s $80 million deal with North Carolina. (See North Carolina, IBM Lock Horns.) Perhaps the folk involved are wishing they'd gone nuclear earlier on. And let's not forget the shock and awe brought on by JP Morgan's decision to bring its IT in-house awhile back. (See JP Morgan Ends IBM Outsourcing Deal.)

IBM's decision to clear out also leaves the field open for others, encouraging commerce rather than litigation. If more firms opted to bail when things started to look bad, it could change the technology landscape for the better.— James Rogers, Senior Editor, Byte and Switch

Organizations mentioned in this article:

  • Dell Inc. (Nasdaq: DELL)

  • IBM Corp.

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