Tech Industry

Hitachi revenue shows storage shift

The company is largely complete with its transformation from mainframe business to storage business.

Hitachi Data Systems has largely completed its transformation from a mainframe company to a storage company.

Of the $1.6 billion in revenue the Hitachi subsidiary pulled in during the fiscal year ended March 31, $1.2 billion--75 percent--came from storage products, said spokesman Bob Neudecker. Mainframe revenue, meanwhile, was just 5 percent, he said.

In the previous year, storage accounted for $774 million, a smidgen over half of the company's $1.5 billion revenue. That means storage revenue grew 55 percent year over year. "We replaced that mainframe revenue with storage revenue," Neudecker said.

One prestigious new account, according to sources familiar with the deal, is online auction giant eBay, which bought a midrange HDS Thunder system to replace a Sun Microsystems T3 storage system. Neudecker declined to comment on the deal.

The figures demonstrate HDS' successful competition against leader EMC, the top company that sells high-end data storage systems with sophisticated features for data protection. "We're becoming increasingly concerned about HDS' impact on EMC," Merrill Lynch analyst Thomas Kraemer wrote in a recent report.

Another boost for HDS will likely be new business partners--most likely Sun, which is working to improve its own storage business after years of seeing EMC systems paired with Sun's servers.

Neudecker said HDS is in talks with Sun and other companies but declined to comment on specifics of any deals.

HDS' current top server partner is Hewlett-Packard, which dumped EMC in 1999. Only a quarter of HDS' revenue comes from HP and other partners who sell the HDS equipment under their own names, Neudecker said.

In the most recent fiscal year, HDS shipped 8 petabytes of capacity--roughly a million times the capacity of a desktop PC hard drive--compared with 3 petabytes the year before.

The company had a "spectacular March," Neudecker added, shipping 1.7 terabytes of capacity. March was the last month of the fiscal year--a time in a company's calendar when the sales force often is working hardest to meet quotas and earn bonuses.

EMC, meanwhile, which enjoyed stellar growth in 1999 and 2000, now is scaling back revenue projections in the wake of the computing spending slowdown.