HDS Talks Sales Trends For The First Time

HDS, which handles the worldwide storage business of Japan-based Hitachi outside of Japan, reported revenue in the fourth quarter of 2008 of $672 million, up 1 percent over the revenue it reported in the same period last year.

HDS’s fourth quarter ended March 31, 2009.

Claus Mikkelsen, chief scientist at HDS, said the Santa Clara, Calif.-based vendor is reaching out to discuss the financial side of its business for the first time in order to the company is successful despite the economic downturn and a drop in its hardware sales.

Because Hitachi does not break out the financials of its HDS business, Mikkelsen said he was unable to go into great detail.

However, he did say that HDS’s hardware sales fell in the fourth quarter in the low teens, but that a rise in its software and support revenue made up for the difference.

HDS’s fourth quarter sales in North America rose by the mid teens, while its indirect sales rose by the low- to mid-single digits, Mikkelsen said.

Another reason to discuss its sales was a chance to brag vis-a-vis arch rival EMC, which in its latest quarter reported an overall revenue drop of 5.2 percent and a storage revenue drop by over 12 percent, Mikkelsen said.

“As I was looking at EMC’s hardware numbers, it reminded me of an old joke,” he said. “Two guys were camping. One guy put on his running shoes. The second guy asked what the first was doing. The first guy said, ‘A bear is coming.’ The second guy said, ‘You can’t outrun a bear.’ The first guy said, ‘But I can outrun you.’”

Mikkelsen said that HDS expects its hardware revenue, which is still the biggest part of its business, to continue to drop as a percentage of total sales going forward. However, he said that as the economy improves he expects overall hardware sales to pick up.

“A lot of the swing will go towards software and services,” he said. “When I look at dynamic provisioning and the cost of software, things look pretty good. Customers do look at TCO (total cost of ownership) and ROI (return on investment). The business is under a lot more scrutiny than before.”

HDS is currently undergoing a reorganization in the U.S. as it starts to get closer to Hitachi’s server business, Mikkelsen said. How the company looks after the reorganization is still not clear, but the storage and server businesses are expected to have their own separate sales organizations, he said.