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August 19, 1998


By CBR Staff Writer

IBM just hates to lose a customer. Earlier this year, the company put its full emergency search and rescue procedures into action when it learned that Axa, the French insurance giant and a large IBM mainframe user, was about to switch to the rival Skyline system from Hitachi Data Systems Ltd. They had agreed a price and the deal seemed set. Then, at the last minute, Axa received a call from the country manager of IBM France, according to an executive privy to the deal. IBM, hoping it could delay the whole deal until new IBM models were available, said that it could supply Axa with a Skyline and match HDS’ terms. Unsurprisingly suspicious, Axa secured from IBM a letter confirming the details. Knowing that IBM did not have a $5m Skyline to sell, HDS suggested that Axa request the serial number of the Skyline IBM intended to ship. Realizing that its bluff had been called, IBM tried to pull out of the deal but Axa held the confirmation letter and the advantage, and decided to hold IBM to the agreement. IBM spent the next few weeks scouring the planet for a Skyline. Eventually, Hitachi came to its rescue. It agreed to supply IBM with a system on one condition: IBM paid list price, a practice now almost unheard of in the IT industry. Bound by its agreement with Axa to match HDS’ original terms, IBM is estimated to have lost around $2m on the deal. But it kept the customer.

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