Compaq, IBM Team to Develop Data Storage Products

Compaq Computer Corp. and IBM Corp. said they joined forces to develop and sell computer network data storage products, investing a combined $1 billion to take aim at computer storage leader EMC Corp.

Compaq and IBM said they will resell each other’s storage products under their own brand names. They will also collaborate to ensure their storage products work with different kinds of computer systems.

Giga Group analyst Colin Rankine said the arrangement will help both firms sell the hardware and software to build companies’ online and networked operations, often housed in giant wired warehouses known as data centers.

“Compaq isn’t seen as a premier provider of storage in the data center, so with this deal it gets the sophistication, complexity and clout in the data center from working with IBM,” Rankine said. “IBM gets volume and gets its name associated with the largest PC vendor in the world.”

Compaq Chief Executive Michael Capellas said the companies expect to see increased data storage sales numbers starting in the fourth quarter. On the New York Stock Exchange, Compaq closed off 38 cents at $24.63, and IBM fell $3.63 to close at $101.38.