IBM Corp followed up its $16bn OEM and technology with Dell Computer Corp earlier this month by announcing another $3bn, five year pact with rival storage vendor EMC Corp. Under the new deal, EMC will expand its existing agreement to buy IBM disk drives for its Symmetrix Enterprise Storage Systems, including higher-end models, and is likely to expand the deal in the future to include microprocessors and advanced custom chips.
The alliance also puts in place a broad cross-licensing agreement in place between IBM and EMC covering storage and other technologies, and the two previously bitter rivals pledged to work together on unspecified mutually beneficial business opportunities. EMC began using IBM’s disk drives in its Symmetrix line just over a year ago. It holds a 35% share of the external storage market, compared with IBM’s 22%, according to Dataquest figures. Estimates have it that between 10% and 20% of IBM’s $1bn of disk drive revenues in the fourth quarter were derived from EMC.
Both the EMC and Dell deals stem from IBM’s formation of the IBM Technology Group last October, headed by IBM senior VP and group executive Jim Vanderslice. The Group’s mission is to pursue growth opportunities for IBM in the OEM marketplace. IBM finds itself both competing and co-operating with its rivals under the new strategy. It is hoping to use its huge stock of technology expertise and patents to counteract the recent fall-off in its own-brand hardware business. See separate analysis story.
