Repost article OBM/Storage Tech 12/18/97
Is this news or old stuff?
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08:47 PM ET 12/18/97
IBM, StorageTek to compete in disk drives
WASHINGTON, Dec 18 (Reuters) - International Business
Machines Corp. and Storage Technology Corp.
have agreed to compete again in the multi-billion market for
mainframe disk storage, the Justice Department announced
Thursday.
The two firms were competitors until StorageTek agreed to
sell all of its product to IBM in 1996.
"Price declines in the industry eased after StorageTek and
IBM stopped competing against each other," the Justice
Department said. So the Justice Department intervened.
"Vigorous competition is what drives the significant
technical improvements and price reductions that we have seen
in these products in recent years and we won't tolerate private
arrangements," said Joel Klein, assistant attorney general in
charge of the antitrust division of the Justice Department.
Pending court approval, the two companies have agreed that
StorageTek will sell to many customers, not just IBM. The two
are among only four competitors in the production of mainframe
disk storage.
The settlement also limits sales by StorageTek to IBM after
1998.
IBM, based in Armonk, N.Y., is the world's largest computer
manufacturer. It had revenues of $75 billion in 1996, the
Justice Department said. StorageTek, of Louisville, Colo., had
revenues of $2 billion in 1996.
The two companies put the best face possible on the
agreement, but were singing a far different tune than they had
when they originally acknowledged they were under investigation
by the government.
On Aug. 14, 1996, IBM spokesman Scott Brooks had said: "We
think that the review will find that this deal is good for
customers." But on Thursday, Ron Kilpatrick, vice president
worldwide marketing and sales, IBM Storage Systems Division,
issued a statement that said:
"Because the agreement with the Justice Department did not
change the basics of the original OEM (original equipment
manufacturer) contract or interfere with our ability to support
our customers, we thought it was best to put this behind us and
move on."
And in August of 1996 David Reid, a spokesman for Storage
Technology, dismissed the government's request for documents as
"extremely routine. We expected a request for information."
On Thursday, Victor Perez, executive vice president of
enterprise business operations, at StorageTek characterized the
settlement as a good thing.
"This is good news for customers whose requirements for
advanced data replication functions and storage are rapidly
changing as they embrace network computing," he said.
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