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Compaq storage dumps IBM product

The company drops Big Blue's high-end storage system from its product line in favor of something else--its own new product.

Mirroring a move IBM disclosed earlier this week, Compaq Computer has dropped Big Blue's high-end storage system from its product line in favor of its own new product.

The move marks the end of one element of a much-heralded deal IBM and Compaq trumpeted in July 2000, under which IBM began selling Compaq's mid-range MA8000 and Compaq began selling IBM's high-end "Shark" Enterprise Storage System. Another part of the deal, to ensure that the two companies' storage products would work together, is still alive, said Roger Archibald, general manager of Compaq's Enterprise Storage Array division.

Earlier this week, IBM said it would sell its own T700 in favor of the Compaq system, and now Compaq has mirrored the move, dumping Shark in favor of its own new high-end Enterprise Virtual Array product.

The product joins a market once dominated by EMC's Symmetrix but now crowded with competition including IBM's Shark and Hitachi Data Systems' Lightning, the latter also sold by Hewlett-Packard and Sun Microsystems.

"The Enterprise Virtual Array is strongly positioned against EMC Symmetrix, IBM Shark and HDS and its resellers," Archibald said.

Compaq's new top-end product comes during hard times for the storage industry, when the slumping economy and heavy competition have lopped away profit margins and raised the previously almost unthinkable possibility of a takeover of EMC.

The IBM-Compaq plan to sell each other's storage systems has been winding down for three to six months, Archibald said. That means the cross-selling deal had a lifespan of only about a year, lending credence to EMC's criticism that customers should be wary of storage strategies that change from moment to moment.

Signing deals to sell another company's product is common in the computer industry when one company needs to enter a market quickly. But selling another's product comes with lower profit margins than selling one's own, so such deals often serve as placeholders until a company can fill the product gap on its own.

But even experienced companies such as IBM and Compaq can muff such arrangements.

"Putting extra fingerprints on the product and reselling them didn't bring much value to customers on either side," Archibald said. "For the most part, both Compaq and IBM have such a global presence that customers would prefer to buy the products directly from those who manufacture it."

The new top-end Enterprise Virtual Array might tidy up Compaq's relationship with IBM, but it raises a complication when it comes to Hewlett-Packard, which announced in September it's seeking to acquire Compaq in a deal expected to close in the first half of 2002.

HP sells Hitachi's Lightning system under the XP product line, but Archibald declined to say which system would prevail in the event that the acquisition is finalized.

The Enterprise Virtual Array has a capacity of up to 17 terabytes spread across 240 disk drives. More typical configurations are between 3TB and 5TB, with corresponding prices of about $240,000 to $400,000, Archibald said.

The array has good performance and sophisticated software features on par with EMC's TimeFinder and SRDF, he added. It's built using PowerPC and custom Compaq chips.