Hitachi Data Systems Denies Nikkei Report That It's Freezing High-End Storage Development

Hitachi Data Systems is up in arms over a report on a Japanese business site that said the vendor is exiting the high-end storage business.

Hitachi Data Systems, the U.S.-based subsidiary of Japan-based Hitachi responsible for storage sales worldwide outside of Japan, is denying the report and working with its parent company to understand how the story was published, company officials told CRN.

The interest in the story started last week, when ITpro, an online publication of Japan-based Nikkei Business Publications, published a story dated June 1. A poorly edited English translation with the same date, possibly the result of the Google translation site, was also published.

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The English-language version of the story carried the headline "Hitachi business strategy briefing, new investments in high-end storage to freeze."

After internal business strategy meetings, according to the article, Hitachi included as part of its strategy "freezing the investment in the high-end model of the storage business."

At least one competitor, IBM, used the headline for competitive purposes, by tweeting it to followers.

"Hitachi business strategy briefing, new investments in high-end storage to freeze" -

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An HDS spokesperson told CRN the company is by no means end-of-lifing its high-end storage business.

However, the spokesperson did say that HDS is shifting some of its R&D efforts to different parts of its business, just like other vendors in the storage business.

"It would be silly for us to exit a market where we have dominated for years," the spokesperson said. "We're still adding innovations in our hardware and software, including flash storage, analytics, and converged infrastructure."

The spokesperson said that HDS' strategy for years was to invest in high-end storage, especially in the hardware.

"Now we're moving from disk to flash, and investing in SVOS [HDS' Storage Virtualization Operating System]," the spokesperson said. "We're putting a lot more functionality and robustness into our software. We're also investing in hardware. In those areas of the market where it makes sense, we're going with commodity hardware. But at the high end, no."

HDS has been expanding its converged infrastructure business, and doing a lot with digital transformation, and in November launched its all-flash VSP line, the spokesperson said. "You'll see flash permeate throughout our entire portfolio," the spokesperson said.

Greg Knieriemen, HDS technology strategist and evangelizer, told CRN that HDS is responding to the Nikkei story with a genuine flat-out denial.

"The idea that we would give up on high-end storage is insane and crazy," Knieriemen told CRN. "There is absolutely no merit to the story. As you can imagine, the story has caused considerable concern inside HDS because it is so unfounded."

Bob Madaio, HDS' senior director of product marketing, on Tuesday wrote in a blog post thanking the competition for using the Nikkei headline because it gave HDS the opportunity to highlight its high-end storage capabilities.

Madaio said that HDS is indeed shifting its development to areas with the best promise for the future.

"If you were the executive running Hitachi and deciding where to place your bets to best service your customers in the future, would you want us spending our R&D budget on new, custom ASICs for high-end-only hardware or on flash storage innovation, software-defined versions of our systems, hyper-converged scale-out leadership and unique, value-add specialized hardware that revolutionize things like data analytics?" he wrote.

Alvin Chu, senior director of solutions at Fusionstorm, a San Francisco-based solution provider and HDS channel partner, told CRN he would be very surprised if the story were true.

"High-end storage is their bread and butter," Chu said. "I don't think they'll ever give it up. If you are one of the only guys with mainframe-compatible storage, you won't give it up."

Chu said the storage market is shrinking for hardware manufacturers. "Small and medium-sized customers are moving their apps and data to the cloud, including test-dev and production apps," he said. "Their competitors should be more worried about the shrinking market than what Nikkei says Hitachi is doing."

Market research firm IDC last week reported that the worldwide total enterprise storage market in the first quarter of 2016 fell in revenue terms by 7 percent from the first quarter of 2015. Hitachi and HDS did much better than the total market, with enterprise storage revenue falling 1.6 percent year over year, making it the second-best-performing company of the top six vendors.