IBM, EMC Ink $3B Computer Deal

IBM Corp. said Wednesday it will sell computer equipment to EMC Corp., a supplier of corporate data storage gear, in a $3 billion deal over five years.

Under the agreement, IBM will sell disk drives to EMC that will be used in its Symmetrix Enterprise Storage systems.

"We consider EMC's disk drive testing and qualification process to be the most stringent in the world," said Paul Noble, an EMC executive vice president. IBM "has been one of the few suppliers able to meet our requirements."

In the future, EMC likely will end up purchasing microprocessors and advanced custom chips, IBM said. The two companies also plan to exchange patented information on computer storage and related technology.

"Today one of IBM's fiercest rivals in the storage systems business now becomes one of our best customers for advanced technology," said Jim Vanderslice, senior vice president of IBM Technology Group.

The EMC agreement is the latest big deal announced by The IBM Technology Group, which was created last October to drum up sales of computer parts, software and services. Earlier this month, IBM and Dell Computer (DELL) agreed to a $16 billion technology pact, the biggest of its kind in the information technology industry.

EMC, based in Hopkinton, Mass., is the world's biggest provider of intelligent computer-storage systems, software and services. Its products are seen as superior to similar ones from IBM.

Ahead of the news, shares of IBM (IBM), a component of the Dow Jones Industrial Average, fell 1 5/8 to 165 3/8 on Tuesday amid a broad market downturn. EMC (EMC) dropped 1 7/8 to 113 7/8.

Written By Jeffry Bartash, CBS MarketWatch