Lenovo, IBM Ink End-User Services Pact

Lenovo Group has signed a five-year deal with IBM to provide services and support to its customers. The deal, outlined in a filing with the Hong Kong stock exchange Tuesday, could be worth up to US$245 million for IBM over the term of the contract.

Lenovo plans to expand the services it offers customers with the addition of “fee-based technical support, installation, deployment and other PC-related services,” the filing said.

Lenovo did not reveal when the new services will be introduced, but they are likely to come soon. The company expects to make payments to IBM under this deal during its current financial year, which ends next month.

In an e-mail statement, Lenovo spokeswoman Angela Lee declined to offer details of the new services, but said many of them are intended for consumers and small-business users—markets that Lenovo is keen to crack outside China, and particularly in the United States.

After considering several service providers, Lenovo chose to outsource these functions to IBM, which is one of the company’s largest investors, because the company has an established worldwide services organization and an existing business relationship with Lenovo.

Lenovo expects the deal to generate payments to IBM of $15 million during its current 2006-07 fiscal year, which ends March 31.That amount is expected to rise to $35 million during the company’s next fiscal year, 2007-08, and $45 million during 2008-09. These payments may increase further to $50 million annually during the 2009-10, 2010-11 and 2011-12 fiscal years, Lenovo said in the filing.

-Sumner Lemon, IDG News Service (Singapore Bureau)

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• Lenovo Q3 Profits Up Despite Flat Sales

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