Hitachi Data Systems Inc. (HDS) is laying off sales engineers and managers in droves in an effort to reorganize the company around "solution and vertical specialization areas," such as healthcare and content management, according to insiders familiar with the plans.
HDS officials claim this is not a "reduction in force" as the company is creating "many new jobs in new categories." It declined to say how many sales people have been laid off.
"It's a disaster … they are losing their best people who truly understand storage," said an industry source close to HDS. The shakeup was orchestrated by Scott Genereux, executive vice president of worldwide sales, marketing and support at HDS.
Meanwhile, HDS is also said to be working through the due diligence process to acquire high-end network attached storage (NAS) supplier, BlueArc Inc. Neither company would confirm nor deny the rumor. A former BlueArc employee, who preferred to remain anonymous, said that there were discussions with HDS two to three years ago, but they didn't go anywhere. "The company's under new management now and it would be a logical move," he said.
If HDS does buy BlueArc, it would follow on the heels of its success selling a NAS blade for its Lightning and TagmaStore storage systems. In the latest Diogenes Labs and Storage magazine Quality Awards for NAS, HDS users awarded the blade top marks. [Check out this story for more details.] But HDS might be looking to beef up its NAS offering beyond a blade.
"HDS has a poor NAS portfolio today and there are not that many places they can turn to," said Arun Taneja, founder and consulting analyst of the Taneja Group. He notes that IBM already uses Network Appliance Inc.'s (NetApp) product line. Hewlett-Packard Co. (HP) has PolyServe. EMC is partnering with Ibrix Inc. for scalable NAS and has its own strong offering in Celera. Dell Inc. has its own product line based on WSS 2003. "For HDS there just aren't that many dancing partners. Isilon is too expensive already. Given that, BlueArc is not a bad one to own."
BlueArc is located in San Jose, Calif., just down the road from HDS, which is in Santa Clara. Founded in 1998 at the height of the dot-com bubble, BlueArc has pulled in over $200 million in venture capital for its Titan high-end NAS systems. The company closed $29 million of funding in June and was still not profitable at that point. BlueArc said it has 160 customers in total.
John Parish, associate vice president in charge of terminal technology at Dallas-Fort Worth International Airport Board, is an HDS Thunder user with about a terabyte of storage on this system. The airport also has two NAS filers from NetApp.
"We're happy with them, but we'd definitely be interested in buying NAS from Hitachi, it always makes it easier to buy from one vendor," Parish said.
On a separate but related note, Wall Street and industry analysts were reporting late last week that HDS is working on some kind of deal with Sun Microsystems Inc.
"The computer hardware and software maker [Sun] may be gearing up to sell its entire storage business, including StorageTek, which it recently acquired," said Canaccord Adams in a research note to investors.
HDS has been named as a potential acquirer, but the move is extremely unlikely according to most analysts, as Sun just forked out $4.1 billion for StorageTek. Also, "HDS almost never makes acquisitions," noted Stephanie Balaouras, analyst with Forrester Research. "If they need a technology, they simply build it because they can leverage the research and development strength of their parent company, Hitachi Ltd."
The rumor was also spun the other way, suggesting HDS might try to sell to Sun. Neither company would comment on the speculation. David Scott, CEO of 3PARdata Inc., said the two companies might be looking at a potential joint venture with HDS providing disk storage and Sun the tape component. However, he said these kinds of deals are always very difficult to structure on the business side so that both companies feel they are getting equal value.