IBM Corp is to sell $1.5bn worth of software in a supplier agreement to services giant Electronic Data Systems Corp, and is heralding it as the biggest software deal ever. In fact, the companies have been doing business on this scale for some time, and the latest deal looks more like a simplification of the terms under which IBM provides software to EDS. EDS is expected to make a saving with this new agreement, compared with the money it had previously been paying the computer giant. The software involved in the agreement will include systems management offerings from Tivoli Systems Inc, groupware from Lotus Development Corp and database capabilities with DB2. Last week Merrill Lynch & Co estimated that IBM’s applications generate $1bn a year, while system software sales amount to $12bn, and host software $9bn. Revenue generated from distributed software from the likes of Tivoli and Lotus accounts for $3bn a year (CI No 3,315).
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