Hitachi, Sun renew pact to challenge EMC
Competition is heating up in the data-storage industry, with Japan's Hitachi Ltd. moving to cement its ties with two US technology giants in a challenge to market leader EMC Corp.
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Hitachi today is set to extend the terms of a global storage alliance struck two years ago with Sun Microsystems Inc., under which Sun sells high-end data storage equipment built by Hitachi Data Systems. The renewal of the Sun-Hitachi collaboration through 2006, coming 12 months before their existing agreement was to expire, follows an Aug. 13 announcement that Hitachi had extended a storage-reselling deal with Hewlett-Packard Co.
Together, the two alliances have catapulted Hitachi-made Lightning storage systems ahead of EMC's Symmetrix line in the most recent high-end market share report by the Gartner Inc. research firm, even though EMC continues to outsell Hitachi itself in that segment of the market and remains the overall leader in data storage.
"It makes life more difficult for EMC," noted Roger W. Cox, research vice president at Gartner in San Jose, Calif. "As long as EMC only had to compete with Hitachi Data Systems, they could hold their own in a competitive marketplace."
EMC, based in Hopkinton, had 36.4 percent of high-end storage revenue compared to 21.9 percent for Hitachi in the first quarter, the most recent period for which Gartner has compiled figures. Trailing were IBM Corp. with 21 percent, HP with 11.8 percent, Sun with 7.9 percent, and StorageTech with 1 percent. But when you combine Hitachi's share with those of HP and Sun, both of which sell Hitachi-built gear, they total 41.6 percent.
Sun, which runs its storage operations from Burlington, has reported selling more than 1,200 of Hitachi's Lightning platforms under the Sun StorEdge brand name since the two companies teamed up in August 2001. Both Sun and HP market the storage machines as part of a larger suite of high-tech products for corporate networks, including computer servers.
"A lot of customers want one-stop shopping, one throat to choke," said Mark Canepa, executive vice president of Sun Storage, who cited a line of Sun products ranging from servers and operating systems to storage area networks and services. "They want to call one number."
While diversified technology rivals such as Sun, HP, and IBM have sought to offer customers a portfolio of products, EMC has embraced a different approach. The company has invested more than $2 billion in research and acquisitions in the past 2 1/2 years to upgrade its product line and integrate software that make its storage machines compatible with all of the servers and related equipment that are likely to be found in an enterprise network.
Greg Eden, an EMC spokesman, rejected the one-stop shopping argument, insisting it's preferable to be "server-agnostic" in a market where most companies and organizations have more than one brand of servers in their networks. "What customers want is the best solution for the job, so they'll turn to EMC," Eden said.
EMC has taken a number of recent steps to shore up its competitive standing, including a July 7 agreement to purchase storage software company Legato Systems Inc. for $1.3 billion in stock. On July 1, it announced a deal to take over the storage software customers of BMC Software Inc. And on June 10, EMC extended through 2008 a 20-month-old relationship with Dell Computer Corp., under which Dell builds and sells midrange EMC storage machines.
The moves are part of a consolidation in the data-storage industry, some of it through acquisition but much through resale alliances like those between EMC and Dell, Hitachi and HP, and Hitachi and Sun, for which financial terms aren't disclosed.
"It's given us access to customers we didn't have before," Dave Roberson, president and chief operating officer of Hitachi Data Systems in Santa Clara, Calif., said of the Sun deal. "Rather than fight over the same set of customers, it's been incremental business for the both of us."
Hitachi's alliances are proving to be a test of the contrasting strategies in the high end of the market, said Gartner's Cox.
EMC's latest addition to its Symmetrix line, the DMX, is "arguably the best system in the business," Cox said. "But for EMC, there's the question: Is superior technology enough to counter the advantage of dealing with a company that can provide a broader portfolio?"
Robert Weisman can be reached at weisman@globe.com.
© Copyright 2003 Globe Newspaper Company.
