Dell and Toshiba link up in $5bn deal

Vendors promise strategic alliance could reduce high-street prices.

Toshiba has announced a $5bn (£3.6bn) strategic alliance to supply Dell with components for three years.

Under the agreement, Dell will buy LCD monitors, memory and storage products from Toshiba America Electronics Components, a division of the Japanese vendor.

The deal may be expanded to include other technologies such as batteries and colour display tubes.

Dell is also considering a range of other strategic technology products including Toshiba's new low-temperature, polysilicon LCD screens and new memory products using higher-density geometries. The deal will run initially for three years, then will be renewable each year.

The two companies have until now been rivals in the notebook market space, and the deal comes at a time when Dell has just overtaken Toshiba, ironically, as the UK's largest seller of notebooks.

Julian Phillips, head of Dell alliances, said the deal was done to ensure the vendor had a continuous supply of internal components.

"The DRam memory and display markets have been incredibly volatile over the past year and a company the size of Dell needs to be able to know how much such core products are going to cost and in what units they will be available. It is no good working on a month-to-month basis," he said.

Phillips said one of the key benefits of the alliance to end-users would be a gradual reduction in high-street prices.

"With a constant stream of components coming through at stable prices, we will be able to budget our ranges more effectively, internally and externally," he said.

The competition on the high street is furious anyway, but this could help to give us an advantage."

Dell devices featuring Toshiba components could be available before the end of the year.