Hitachi COO: How To Beat EMC

Jack Domme, the chief operating officer (COO) of Hitachi Data Systems, spoke with CMP Channel Editor News Steven Burke about how the enterprise storage vendor, which has won raves for its innovative product line, is beating rival EMC in the sales trenches.

Talk a little bit about how and why Hitachi is beating EMC in the sales trenches?

The reason why we are beating EMC starts with our strategy which is what we call service oriented solution strategy. That is geared around some enabling technology called virtualization which has really started to be adopted as a benefit to our customers around saving costs, being more efficient, creating higher utilization, around all of these resources. Part of why we are beating EMC is that our technology and our solutions have been delivered on time and on strategy. This is a great thing for our partners. They can really count on our delivery and execution schedule.

Is there a recent big deal that Hitachi has won head to head against EMC you can talk about?

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We went into a financial institution that had a requirement to manage this data better, to save the data. We went in with a (solution provider) partner very well versed in the archiving concepts of data. Saving the transaction for years, making sure we could help the customer around legal discovery and compliance issues.

What this company needed was a great platform to be able manage the transactional data, the archive data, the signature data, and be able to store it and manage it very efficiently over several years.

They came to Hitachi and looked at the technology. The customer ran us through lots of proofs of concepts. The biggest problem was can this solution scale and grow to the enormous size they need in the financial sector? Can we store the data for multiple, multiple years or multiple decades? Can we move the data from very expensive storage to cheaper storage as the value and the need for that data diminishes over time? And can we discover all of that data? So if they get asked by the SEC to go out there and search all records and transactions, can you actually go out and discover all of the data, pedabytes of data, and discover or search it and bring it back? This is a real case where compliance is really driving our customer to a different kind of solution set.

We went in there with a partner that had excellent services, excellent process capabilities and we leveraged that competency and put it on the Hitachi platform. It was a good marriage providing an excellent solution for the customer.

Was it head to head against EMC?

Absolutely. It was against EMC Centera. It was a multiple million dollar, multi-year deal with a lot of growth. It was about six months ago. Part of it is our super capabilities, the scale. The way it has been done in the past is through content management systems. But they don't grow very big. They have a hard time scaling to the pedabyte. These old systems are used to managing fairly small slices of data sets. With the Hitachi story we are now managing all data and information together. We are allowing the customer to manage it together, govern it together, protect it together.

All these things help the customer save money and scale out the solution. The proof of concepts have to show them these solutions can scale and integrate with all the other components that these IT shops have to work with. The difference for us right now is EMC goes and buys dozens and dozens of companies that are not integrated. What our partners like about us is it is a very integrated story, a very integrated platform and very open, very open to all kinds of choices for the customer and partner to mix and match for the best of breed. Mix and match with an integrated approach.

How did Hitachi Data Systems do in the most recent quarter?

From an overall perspective we grew in the high teens for the quarter around our overall solutions, including software and services. What partners like is the ability to sell the integrated solution. That includes not only the hardware but excellent software. Software is a big enabler in all of this. They also look for services from us. So we provide all our partners services they can leverage and make money off of themselves. Hitachi and Hitachi Data Systems are really known around the world for high quality. So when you are a partner and you've just sold a solution that the customer likes that never breaks, the amount of margin that our partners get from our support and service capabilities are extremely high. That is a major differentiator against EMC which probably isn't well known their quality and requires a lot of support effort to keep those systems going.

Do you think you gained share against EMC in the quarter?

I think we had substantial gains in market share. In software we had high teens growth.

Compare the total margin your partners are seeing on a solution versus EMC?

I can't comment on a head to head comparison. All I can say is customers are seeing the value that we are delivering, the combination of hardware, software and services. The margins are fairly healthy for us and our partners. That is really because the customers are willing to pay for that value. Not only value on the transaction side but also value on the back end side around maintenance and services as well.

We are very fair. It is a win win situation with our partners and customers. That is the triangulation of winning: our partners win, our customers win, and we win as we build great solutions.

Talk about the storage virtualization comparison versus EMC?

We just haven't seen EMC (storage) virtualization come out. It's almost as invisible as Vista. We don't see it in accounts. When you are trying to build virtualization enablers it is a long road map. I think our partners really appreciate the R and D and vision they get with Hitachi. Remember everything we are building now delivering today to our partners was envisioned five years ago. It is a methodical process to build the steps and building blocks to even be able to talk about virtualization today the way that we do. EMC has a long road to catch up on. And I think a lot of partners and customers are seeing that today. You can't just hype up the story and pretend you are going to deliver. It takes a very long process.

We are working on stuff that we are going to deliver three or four years from now that a lot of our partners know about because they are selling that whole story. Not everything is solved today. Let's be honest. There is no silver bullet. What our partners like about our approach to this is it is a long process. We built it four years ago for today. And we are building it today for the future.

Talk about the Hitachi R and D Investment?

We interact with six different laboratories throughout Hitachi. We have a major business in nuclear engineering that allows us to cool our disk drives. I don't think EMC has a nuclear engineering business do they? If you can imagine the kind of power we have I don't know if everybody knows that we used to build all the disk drives for ipod so when we talk about edge data and edge storage, EMC doesn't even enter into this. We have another business that manufactures disks and they manufacture disks for a lot of our competitors. They are comparable to Seagate. That gives us a full vertical of storage vision of storage capabilities to drive solutions for our partners and our customers.

NEXT: Hitachi Vs. EMC: The Storage Virtualization Difference

Talk about how many storage virtualization engagements Hitachi has done?

There is a recent survey by The InfoPro that just rated Hitachi as number one in virtualization. They rated IBM as number two. They didn't even register EMC In the virtualization war.

Any data on how many partners you added in 2007?

We have a pretty large subscription list of partners that want to join the Hitachi ranks. We are very selective with our partners. And we try to be selective because we invest in supporting them and making sure they have a fair shot and they are in a win win situation as well.

How big a difference is there between the Hitachi and EMC storage architecture?

Look at EMC. They have a company called Documentum. That means they have a very high what we would call vertical relationship of technology. It means that they have content management and a lot of that stuff. It sounds like it is all integrated, but it creates a lot of partner conflict. The more companies you go buy and the more vertical you become actually the more competitive your partnerships become meaning you are competing with your so called partners before. EMC used to have a lot of content management partnerships.

When they went and bought Documentum that created conflict. No longer do those partners trust that strategy from EMC. What we have tried to do on the flipside is we are a platform infrastructure play. That means when our partners go out they can partner with any of the content management companies like Documentum, FileNet or Interwoven. So they actually have much more expansion or partnership capability or solution integration capability with a lot of the applications.

Talk about Hitachi's dynamic provisioning capability?

We announced it three or four months ago. It is going to gain traction like nothing you have never seen before. This is enabled by years and years of execution around virtualization. This dynamic provisioning allows people to spread the data across anybody's storage, any vendor's storage it allows us to control the utilization of the storage. So it allows for very very efficient usage of the storage infrastructure for use by application, by competing application, by customer requirements around data or databases and file systems. This thin provisioning or dynamic provisioning is really going to grow in momentum and acceptance.

Compare that to the EMC technology?

I think they are announcing it for the second time and it is going to be coming soon. From a partner perspective you have to ask how much faith do you have in whether EMC will deliver that, how much faith do you have in the technology capabilities, how much faith do you have in their road map? So far the partners have spoken loudly in their confidence in Hitachi.

What is your installed base of virtualization?

We have over 7,000 installations of our virtualization. We have over a 50 percent connect rate in everything we sell around virtualization. That is why you see the high growth we have in software.

What is the health of the economy and different sectors you compete in?

We are seeing excellent growth both with our partners and ourselves in the financial sector. We are seeing excellent growth in the telcos. Retail has really picked up. I think it hasn't picked up for everybody. So what we are seeing against EMC is we are seeing ourselves in accounts we never saw before. Budgets are flat or tight so customers are looking for a solution that saves them money. A lot of customers are sweeping the floor (moving) from EMC to Hitachi. And it is driven by the capabilities. In big sectors like retail, financial and telco they have very sophisticated IT groups. They don't decide on these technologies without thorough proof of concept,evaluations and implementations.

I think what is happening here is the Hitachi story and capabilities and execution and road map and vision are all really playing out in the decisions in the field where we are seeing our real growth versus EMC take place.

When budgets are tight, is there more big shops looking at alternatives to the big boys like EMC?

The growth of information is not slowing down. What customers are looking for is a solution that can scale around their growth needs around managing information but also do it in a way that doesn't create growth in their capital expense or operating expense around the management of storage. That is exactly what our whole solution is geared for. That is why our partners can go out and sell this. It is a story. They can tell customers they can provide them with a solution that can manage more with less, less cost, better managed, better governed and better protected, wrapping the story around the Hitachi solution.