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IBM storage system pushes Compaq aside

Big Blue, which announces a new midrange storage system, cancels an agreement with Compaq Computer to resell a competing product.

IBM announced a new midrange storage system Tuesday, but more quietly is canceling a competing product Big Blue had been selling through a partnership with Compaq Computer.

As previously reported by CNET News.com, the new system is the Fast T700, a midrange storage system that connects to servers using the improved 2gbps Fibre Channel standard. IBM is aiming the product, with an average price around $100,000, at midsized companies, said Adelio Sanchez, general manager of IBM's storage networking division.

At the same time, though, IBM is backing off a heavily promoted agreement to resell a Compaq storage system called the MA8000 Modular Storage Array. IBM agreed to sell it, while Compaq would sell IBM's top-end "Shark" system to some customers, and both companies agreed to make sure their storage systems and servers would work together.

IBM spokeswoman Sandra Dressel said IBM would stop taking orders for the modular system as of Tuesday. The reasons: "Customers were playing us off each other," bidding the two companies against each other, and IBM sales partners preferred to sell with IBM equipment, she said.

Behind the scenes, though, IBM had to deal with two product lines that competed against each other. The Fast T500--a predecessor to the new T700 but with a slower network connection--actually was sold by IBM's Intel server division, leaving a hole in the storage division's product line that was filled with the Compaq product, said Illuminata analyst John Webster.

Now, however, the Fast line is under the storage group's control, he said. "Once (IBM's storage group) got its hands on the Fast product, it certainly didn't need to be reselling a Compaq product," Webster said.

But EMC, IBM's biggest competitor in the overall storage market, argues that IBM's product shifts lead customers down technological blind alleys. Ken Steinhardt, director of technology analysis, said his company's competing Clariion system is a single architecture that's lasted more than 10 years, with hardware and software improvements that don't leave customers in the lurch.

But IBM has been putting pressure on EMC as well, and some have suggested that Big Blue could swallow the storage specialist.

IBM has an aggressive storage push, setting up an independent group to sell the products and devoting $400 million to sales, marketing and product development. Now, the network storage group, which works on storage systems independent from servers instead of directly attached to them, is devoting another $100 million to the effort, Sanchez said.

Also Tuesday, IBM announced upgrades to lower-end TotalStorage Network Attached Storage (NAS) systems, with the models 200, 300 and 300G benefiting from faster 1.13GHz Pentium III CPUs and larger hard disk capacity. Also upgraded was the 200i, a lower-end cousin to the Fast series that uses ordinary IP (Internet protocol) instead of Fibre Channel networks.