IBM to resell products from Storage Technology

IBM has contracted to purchase and market the products of Storage Technology (StorageTek), a longtime competitor that has managed to maintain a technological edge over much larger IBM. StorageTek and IBM will combine resources for the development of coming StorageTek products, and IBM will assume responsibility for marketing both companies' lines of mainframe storage devices. Analysts suggest that StorageTek will benefit substantially from the agreement, and the company's stock price rose 13% in trading after the contract was announced. StorageTek is expected to gain from the leverage of IBM's superior salesforce, increasing its market share while also diminishing the profit margins of its products. IBM is expected to benefit primarily from access to StorageTek's range of technology and from the attrition of one more competitor.