Dell Computer is the latest hardware supplier to pair up with electronic marketplace vendor Ariba Inc. Under a deal revealed today, the build-to-order PC maker says it will add Ariba's E-commerce software to its business-to-business Web sites in an effort to make them full-service marketplaces for customers in the small- and medium-sized business sector. As part of the arrangement, Dell's sites will soon feature electronic payment services from Ariba partner American Express Co.

Dell (Nasdaq: DELL) says it will also use Ariba's software to connect more efficiently with its own suppliers, such as circuit board and memory manufacturers. Company officials say they expect the move will save the company $2 billion annually in procurement costs. Under the terms of the deal, Dell is taking an equity stake in Ariba (Nasdaq: ARBA), details of which were not disclosed.

Last week, IBM disclosed a similar pact with Ariba, and IBM also took a stake in the company. Observers say the moves are part of PC makers' continuing efforts to diversify beyond manufacturing. "More and more, they want to define themselves as services companies," says Bill Lesieur, a Technology Business Research analyst.

Investor reaction appeared to be mixed; Dell's stock was up 2-5/8, or nearly 5%, to 57-3/8 in late-afternoon trading, while Ariba fell 15-1/8, or 5%, to 282-7/8.