The five-year contract with Dell was signed in December 2004 and covered managed desktop services and hardware support for 75,000 Philips employees across 60 countries for a 'global workplace' project called Glow.
Dell was the prime contractor on a deal which also included Atos Origin and Getronics to standardise the Philips desktop environment on OptiPlex desktops, Latitude laptops and Precision workstations.
A spokesman for Philips in Amsterdam confirmed to silicon.com that the deal has been "discontinued" but said the company will continue to work with Dell on other projects.
Dell said in a statement: "Both parties have now concluded that the programme in its current format does not sufficiently guarantee successful completion and therefore Philips and Dell mutually agreed to cease this development activity. Philips and Dell have significant mutually beneficial relationships that will continue and is not impacted by this particular activity."
Kate Hanaghan, analyst at Ovum, said it makes sense to end a failing deal sooner rather than later but added that it will be a big blow for Dell.
She said in a statement: "The end of the Philips deal shows that the Dell model is not bullet-proof."
Andy McCue of Silicon.com reported from London.
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