IBM and Compaq have cancelled their 15-month old agreement under which the two companies resold each other's data storage systems.

Specifically, IBM had agreed to sell Compaq's MA8000 Modular Storage Array while Compaq sold IBM's top-end Shark system.

An IBM spokeswoman said the company would stop taking orders for the modular system as of Tuesday, because of "pricing issues and concerns among IBM's business partners". Both IBM and Compaq said the decision to end the agreement was mutual.

Big Blue announced a new midrange storage system on the same day. The FastT700, which is aimed at mid-size companies, connects to servers using the improved 2Gbps Fibre Channel standard.

The FastT700 is capable of supporting up to 16Tb of stored data, as well as 64 servers. It supports Windows NT and 2000, Novell NetWare and Red Hat Linux.

The product replaces the FastT500, which moved data at 100 million bytes per second and could handle data from up to 16 servers.

Extending its aggressive storage push, IBM also said it would invest another $100m in its storage networking products.

Last week, Compaq unveiled its new Enterprise high-end machine. Features of the new device include optimisation for global storage networking, VersaStor technology that enables Vraid, Vsnaps and Snapclones, and scalability.

Hewlett Packard, which will acquire Compaq, has said that the combined company would compete aggressively with IBM in storage devices and services.