Compaq Computer has signed a deal to use software and services from start-up Storability as part of its plan to simplify customers' data-storage infrastructure.
The three-year deal, which the companies will announce Monday, is worth $3 million to $5 million, said Kirby Wadsworth, Storability co-founder and vice president of marketing. Compaq bought two licenses for the Storability products and services, one for North America and one for Europe, he said.
Compaq's services group is purchasing the software for use with its "Computing on Demand" initiative, announced in July 2001, Wadsworth said. One facet of that program is the Storage on Demand effort to let Compaq handle storage needs for customers. The services are part of Compaq's move to diversify revenue into businesses more stable than the fickle PC market.
Compaq executives were not immediately available for comment.
The deal is an endorsement for Storability, one of a host of companies that hope to profit by reducing the headaches companies have managing their burgeoning storage needs. The 100-person company, based in Southborough, Mass., manages customers' storage requirements and also sells the software it uses to do so, along with training on how to use it.
Storability's software provides a general interface to storage hardware, which makes it easier to control and manage products from different companies, Wadsworth said.
The company competes with StorageNetworks, IBM and others. Wadsworth said Storability beat StorageNetworks for the Compaq contract.
Storability has also had discussions about its software and services with IBM, he said. "We see them as a great opportunity," Wadsworth said.
The Compaq contract involves an initial payment to Storability with additional revenue based on the number of customers Compaq signs up by way of its Storage on Demand program.
Storability isn't yet profitable. While the company had predicted profits in the second quarter of 2002, Wadsworth said the company now is focusing on growth--hiring sales, marketing and engineering staff, for example--which will increase expenses. The company raised $30 million in June.