Compaq, IBM in SAN Pact

SAN MATEO (07/07/2000) - In a deal that could exceed $1 billion in joint investments, former storage rivals Compaq Computer Corp. and IBM Corp. last Thursday announced an agreement to bury the hatchet and couple their storage offerings into one interoperable product line, a move creating a portfolio large enough to possibly threaten EMC's dominate market share.

"What we are doing today is we are taking the anxiety out of implementing storage networking by making our storage solutions interoperable," said IBM Senior Vice President Nick D'Onfrio.

Targeting the SAN (storage area network) market, representatives for both Houston-based Compaq and Armonk, New York-based IBM said they will pool their storage technologies to create simplified, heterogeneous storage solutions that operate across multivendor platforms.

"In this age of the Internet, no one can do it all," said Compaq CEO Michael Capellas. "It's all about interoperability."

Unifying the two companies' storage technologies will also allow each of them to augment their current offerings with many of the other's software and hardware solutions.

Compaq will add Big Blue's "Shark" Enterprise Storage Servers and certain Tivoli Systems Inc. software management systems to its menu. Likewise, IBM will begin to offer Compaq Storage Works Modular Array storage systems, which already house IBM hard-disk drives and add support for Compaq's VersaStor technology.

"We are seeing some SANs deployed with heterogeneous components, but not universally," said Randy Kerns, a partner at Evaluator Group, an Englewood, Colorado-based analyst firm.

"This [announcement] will accelerate that progress with two huge companies behind it saying that all their storage will work together and that all new releases will also interoperate. This takes away some of the fear that the SAN you buy will be obsolete in a few months," Kerns said.

But Mark Frederickson, a spokesman for Hopkinton, Massachusetts-based EMC Corp., said he believed the Compaq/IBM partnership will only confuse the customers of the two companies.

"I would hate to be a salesman for Compaq or IBM today," Frederickson said, who called the deal "a sign of dual desperation" and a prelude to "a positioning nightmare" that will force sales representatives for both Compaq and IBM to explain away competitive bashings made against each other prior to the truce.

"And there is no new technology in the [Compaq/IBM] deal," Frederickson added.

"Every product that's being offered now [from the Compaq/IBM alliance] could have been purchased separately last week."

Despite EMC's strong position, the storage giant may face another test of its market leadership on Tuesday when Palo Alto, California-based Hewlett-Packard Co. is set to unveil its own high-end SAN storage hardware and software offering that an HP source called a "direct attack" on EMC.

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