Storage competitors Compaq and IBM have buried their differences to agree a $1bn deal that promises to make storage networks more flexible and easier to deploy and manage.

Compaq will sell IBM's Shark enterprise storage server and Tivoli systems management software, as well as providing support services for the IBM products. In return, IBM will sell Compaq's Storageworks Modular Array storage systems and software, which will include IBM hard disk drives. IBM will also support Compaq's VersaStor storage virtualisation technology.

By boosting both companies' portfolios, they will be better positioned to displace storage market leader EMC from its dominant position. Sun Microsystems is also keen to improve its position in this area.

Both Compaq and IBM expect the deal to accelerate customer acceptance of open storage networking technology. To further this, the companies have both pledged to enable interoperability between each other's storage hardware and software. Furthermore, the companies will share their knowledge with the industry to help create standards for technologies including storage area networks (Sans).

Anoop Ubhey, enterprise industry analyst at Frost & Sullivan, said the deal would answer the interoperability concerns of customers who are wary of being locked into a proprietary San.

"It seems, at least on paper, to be a good deal for end users in that it promotes open storage standards," said Ubhey, who added that there was a good commercial and technological fit between the two companies.

"Instead of just talking about it, IBM and Compaq are emphasising their commitment to open standards and interoperability," he added.

Donal Madden, storage business manager at Compaq, said it was laying aside its differences as a competitor to IBM in the interests of promoting interoperability. "The storage industry has been playing a poker game. A few opportunists have tried to define de facto standards but these haven't succeeded. We're trying to cut through this nonsense," he said.

"We're going to compete on capability and not on standards with IBM. Also, before this we had no mainframe offering, so the deal also fills out gaps in our portfolio," he added.

Linda Sanford, general manager at IBM's Storage Subsystems Division, said: "Delivering true interoperability across our storage products - and open standards for the storage industry - will benefit all customers through greater choice and flexibility, ease of use and increased speed to deployment."

In a clear reference to market leader EMC, Sanford added: "Vendors who continue to promote proprietary systems and standards will find themselves increasingly isolated."

Ecommerce, email and applications like customer relationship management are driving corporate demand for storage, as enterprises collect an ever-increasing volume of data on customers and sales. According to IDC, the value of the storage systems market will grow to $53bn by 2003.