HDS Reports Strong Late FY2009 Storage Growth

Combined storage revenue for HDS and Hitachi, its Japanese parent company, reached $882 million in the fourth quarter of fiscal 2009, which ended March 31.

That represents an increase of 6 percent over the same quarter last year, HDS executives said.

HDS sells storage products from Hitachi outside of Japan, while Hitachi sells storage in Japan.

Hitachi released its company-wide financial report on May 11.

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For all of Fiscal Year 2009, combined revenue was $3.27 billion, down 3 percent compared to 2008.

The results represented HDS's best-ever fourth-quarter revenue, said Asim Zaheer, vice president of corporate and product marketing. The previous quarter, which ended in December 2009, was the company’s best overall quarter ever, he said.

HDS did not report earnings.

Fourth-quarter revenue in North America and South America grew 8 percent over last year, which was relatively weak compared to a 10-percent growth in EMEA (Europe, Middle East, and Africa) and 20 percent in the Asia-Pacific region, excluding Japan, Zaheer said.

Hardware sales accounted for 55 percent of sales, with software accounting for 15 percent and services for 30 percent. Hardware sales grew slightly compared to software and services.

“That’s pretty good, considering we were one of the big iron vendors,” Zaheer said. “We’re trending pretty well. We’re looking to take more market share, especially in the midrange.”

HDS declined to cite specific revenue figures by geography or product lines.

On the hardware side, sales of HDS’ modular array line grew by over 30 percent in the fourth fiscal quarter compared to last year, while sales of its enterprise storage arrays including its USP V and USP VM declined by single digits.

That drop in high-end storage arrays stems from a push by HDS to help customers adopt virtualization and thin provisioning technologies as a way to control capacity growth, said Claus Mikkelsen, CTO of HDS storage architectures.

“That results in a move away from enterprise storage,” Mikkelsen said. “As customers do more virtualization and thin provisioning, they can move away from enterprise storage.”

Mikkelsen cited the case of one customer which originally was only utilizing 10 percent of its USP V array’s capacity to the point where that customer does not expect to purchase new storage capacity for the next two years.

“We’re selling more software and services, and virtualizing more on our modular storage,” he said. “Customers are still poking away with 20 percent to 30 percent utilization. That means they’re wasting 70 percent to 80 percent of their capacity.”

When asked whether breaking out HDS’s revenue figures from those of parent company Hitachi was a prelude to HDS considering becoming a separate company, Mikkelsen declined to directly answer, and said anyone was free to interpret it as they wished.

Mikkelsen said, the goal for releasing the data was to show how well HDS has done, and how its product mix is changing.