"We wouldn't really class IBM as a leader in storage, not with its history of declining revenues."
They are still the second largest storage provider in the world, or third (depending upon the NTAP vs IBM revenues for the quarter). Also, they invented most of the storage industry, like disk drives and tape formats, etc. Not to say things are going swimmingly, but they are still among the leaders... unless you consider EMC to be the only leader in storage.
If you look at the portfolio, they are a leader in Flash, one of the top three players (with EMC and HDS) in the declining high end disk market, the leader in tape, have a solid mid-range product, they have a solid dedupe/VTL product (not that anyone knows it). The only gap in the portfolio, and it is a major gap, is NAS.
I doubt IBM is going to sell off storage. They make a lot of cash at the margins in the storage market, i.e. Tivoli, and it is still a higher margin, growing area. The big problem IBM has is that they used to be basically a high end storage player (just DS8). They OEMed, from LSI, mid-range which was lack-luster and are slowly re-creating that market share with V7000. People are buying less high end storage than they used to, be it DS8, VMAX or VSP. This hurts IBM more than it hurts EMC because EMC can fall back on a large mid-range business, a growing Isilon filer business and Data Domain. What IBM really needs to do is create a great scale-out NAS platform with GPFS. That is where EMC is growing and obviously NAS is NetApp's business. IBM doesn't really play in any major way in that huge market. If you don't have a NAS business and you are in storage, it isn't going to look great because people are paying far less per TB for block storage than they were a few years ago. You need the ever expanding NAS market to off-set the price declines in FC disk.