History (1998): US Justice Department Probes STK/IBM Mainframe RAID Agreement

Shortly after the accord between RAID competitors Storage Technology and IBM, the latter distributing the entire mainframe line of the former (Iceberg, Kodiak, Arctic), the US Department of Justice (DOJ) stepped in to get more details on the exact terms of the transaction, in order to determine whether the agreement was in violation of anti-trust regulations, given that the combined market share of the 2 companies is nearing 45%, ahead of EMC’s 40%, with Hitachi and Amdahl gathering the rest.

Ultimately, the DOJ has agreed to allow the 2 firms to extend the term of their relationship through the year 2000, but has asked that in return the companies make some minor revisions to the agreement.

More specifically, the compromise stipulates that StorageTek will sell to more than one customer in USA, not just to IBM, in order to keep the offerings more competitive.

The settlement limits sales to IBM after 1998 and the long-term volume commitments between the 2 companies have been eliminated.

During 1999, DOJ approval may be required for Big Blue to purchase beyond a certain volume of STK’s DASD, unless the latter sells a minimum volume of S-390 attachable RAIDs through non-IBM channels.

In the end, the new terms may profit StorageTek more than IBM. The Louisville, CO-based company now has its hands free to develop a FC interface (and not just IBM’s proprietary SSA), which it could then sell directly or through reseller channels.

This article is an abstract of news published on issue 120 on January 1998 from the former paper version of Computer Data Storage Newsletter.