IBM and EMC Agree To Share Code, Customers

Competitors IBM and EMC have announced they will share some of the code underlying their storage and server software in a bid to make their systems work together more smoothly.

The companies said the deal, which includes limited sharing of programming interfaces, will provide enterprise customers with more flexibility by allowing them to mix and match storage products. The fact that IBM and AMC made this move despite being competitors may indicate there is strong demand for such blending capabilities.

“It may be that companies are telling them they’re not going to spend at all if their only choice is to buy everything from one company,” IDC research director Bill North told the E-Commerce Times. “This probably gives them each a chance to increase their business, rather than try to grab market share from each other.”

The deal may have taken place now because the two companies are starting to see more interest in high-end systems than they did during the tech doldrums of the past couple years, North suggested.

U-Turn Attempt

The deal’s timing is important for other reasons as well. EMC is bidding to emerge from a turnaround that began with layoffs and other cost cuts shortly after the Hopkinton, Massachusetts-based company posted a US$1 billion loss in the third quarter of 2001.

Since its low point, the company has stemmed its financial losses and more recently took aggressive steps to regain its market dominance, which companies like IBM and Hitachi had been eroding. In July, EMC bought Legato Systems for $1.3 billion in a move designed to beef up its own software offerings.

Nitty Gritty

Although neither company will turn over all of its software code, both agreed to a framework that will enable them to exchange programming interfaces for their disk storage products. They also struck a deal to extend an existing cooperative support agreement to include a wider range of server, storage and software products, supporting more complex joint installations.

In addition, the agreement calls for EMC to receive licenses to several key IBM technologies, including the interfaces for IBM’s TotalStorage servers and the right to use other IBM tools for managing data storage.

Financial details of the deal were not disclosed.

Friends and Enemies

The deal is the second major partnership IBM has announced in the span of a few days.

Last week, Big Blue announced that Siebel Systems had signed on to provide a version of its customer relationship management offerings through IBM’s Internet-based on-demand program.

In the latest pact, both companies got a boost from the stock market after the agreement was announced, with IBM shares up slightly to $90.65 while EMC shares climbed to $13.55.