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HDS growing VSP and NAS array sales, cautious on flash

Like other pure-play storage vendors, Hitachi Data Systems is growing revenue at double-digit rates despite the slow economy. But HDS is bucking industry trends with its growth.

HDS grew disk storage revenue by 11% year-over-year during the first quarter of 2012, according to IDC. That’s a bit slower than EMC (14.4%) and NetApp (11.1%), but much faster than IBM, Hewlett-Packard and Dell. HDS made great progress with NAS and enterprise SAN sales – two categories with slow or no growth. IDC said industry-wide NAS sales declined 1.9% during the first quarter, but HDS claims it increased NAS sales by more than 50%. And HDS high-end SAN sales grew more than 30% despite flat growth industry-wide for storage systems costing $250,000 or more.

HDS remains fifth in overall storage disk sales, but is gaining on No. 3 IBM and No. 4 HP.

Asim Zaheer, SVP of marketing for HDS, attributes the NAS spike to Hitachi’s acquisition of its long-time OEM partner BlueArc last September. HDS sold BlueArc NAS systems since 2006, but Zaheer said sales jumped after the $600 million acquisition. He said customers were looking for that commitment from HDS, especially after BlueArc indicated it might become a public company.

“Our belief is there was pent-up demand out there with potential new accounts relative to our long-term commitment to the technology,” he said. “They were waiting for a signal from us. BlueArc was discussing an IPO, but we took that concern off the table.”

The Virtual Storage Platform (VSP) enterprise SAN is Hitachi’s flagship product, and HDS picked up market share from EMC and IBM in that category. HDS likely benefitted from EMC’s transition to a new Symmetrix VMAX, but Zaheer said the VSP’s storage virtualization features also helped. “There’s quite an increase in customers virtualizing third-party arrays because of concern about budgets,” he said.

Zaheer said the hard drive shortage didn’t hurt HDS much. While it raised prices just as all its major competitors did, Zaheer said HDS shipped all of its orders in the first quarter. “We felt it, but we did not have to stop or delay shipment on anything,” he said. “I don’t know if we’re out of the woods yet, but our supply appears to be back to almost normal levels.”

HDS is less bullish on flash than its competitors, particularly EMC. So far, HDS’ flash offerings consist of the option to add solid-state drives (SSDs) to arrays. “The market is there, but it’s not exploding to the levels that EMC and others have predicted,” Zaheer said. “You have to have the right use cases and the economics have to make sense. If customers feel they need SSDs in their arrays, we can do that. It’s growing, but not like the hockey stick that everyone thought.”

Still, Zaheer said HDS is planning other flash products, such as all-SSD arrays and server-side flash, in anticipation that demand will grow. “You’ll see some announcements soon,” he said.

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