HDS' Roberson Says Hardware Doing Well, Software Key To Future Growth

That's the word from Dave Roberson, president and COO of Santa Clara, Calif.-based HDS, who addressed about 80 solution providers at its channel conference this week in Napa, Calif.

While HDS does not break out channel vs. direct-sales figures, the channel is playing a more important role, especially as the $2.2 billion company competes against $6 billion EMC, Roberson said.

"That's why I say when I see you [in the audience], I see revenue," he said. "Maybe I should say when I see you, I need revenue."

Roberson said the company shipped 5.4 Pbytes of storage capacity in September, more than it did in its first full year as a storage vendor. The company's Lightning 9900 V enterprise arrays are now shipping with an average initial capacity of more than 16 Tbytes, he said.

"Anyone who says storage growth is not happening is wrong," he said. "We are poised for a really strong growth period, and it's time for us to get more than our fair share."

To drive sales, especially as the year unwinds and budgets show flexibility, Roberson said he ordered the factories to crank up production.

"All our competitors are in their fourth quarters now, and our customers are also in their fourth quarters," he said. "We are in our third [fiscal] quarter, but we're acting like it's our fourth quarter. I asked what my people expected to sell in the quarter. They said we should expect growth of 'x.' I said, 'Let's make 1.2x.' "

On the software front, HDS is growing fast but plans to put more emphasis on this area.

Roberson cited figures from research firm Gartner showing that HDS' storage software business grew more than 70 percent in 2002 compared with 2001, making HDS one of only three vendors in the top 10 showing growth.

In the data management space, HDS has already developed a number of applications with much of the functionality, especially storage automation, the market is requesting.

However, he said, the company is taking a step-by-step approach into this part of the market in part due to customer perceptions of Hitachi as a hardware vendor.

"We feel we need to walk before we run," Roberson said. "Automated data management is running. We need to step back. A lot of people were not comfortable with our software in the last 12 to 18 months."

HDS has also traditionally shied away from software at the application level, but that is changing, he said. For example, he said HDS just last week unveiled a relationship with Ixos Software under which the two will cooperate in the enterprise management arena as well as in applications aimed at managing the archiving of e-mails for the regulatory and nonregulatory space.

"Through the users' eyes, we are getting a different look at storage," he said. "But we have to look at it through the users' eyes."

Unlike its competitors, HDS prefers to partner with other software developers rather than acquire them, Roberson said. Part of that is because the company has not found the right company to buy, he said, hinting that acquisitions are not out of the question. "We have the capability to make acquisitions," he said.

But acquiring a company, he said, locks clients into the hardware vendor and cuts their flexibility. "Our approach is to partner," he said. "It's an extensible approach. There are no lock-ins. With partners, we can also do a better job of integrating the technology in the short term. With acquisitions, the integration takes longer."

Solution providers said Roberson was hitting the right target by emphasizing the importance of storage going forward.

Applications are driving hardware today, and customers are demanding that the storage devices they purchase are the right ones for their applications, said Mark Oakes, vice president at Technical Solutions, a Troy, Mich.-based solution provider.

"Hitachi is now looking at how the application is using the storage," Oakes said. "Hardware today has to prove itself ready for customers' applications."

Hitachi can be slow releasing new storage products because of the long testing process they go through. But that is also a strength, ensuring the products are bulletproof and ready for market, said Terry Buchanan, director of solution services at Conpute, an Oshawa, Ontario-based solution provider.

Other vendors tend to focus on marketing their software as quickly as possible and shipping it prematurely. "Hitachi is an engineering company, not a marketing company," he said. "We are their marketing arm."

Hitachi is also bringing its channel in early on the software development process, Buchanan said. "They recently brought in product managers and developers from Japan, along with translators," he said. "They met with the integration community in Canada. Half of what we told them has already been implemented."