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HDS focuses on storage software

Hitachi Data Systems will announce its NAS 'head' appliance in the next three or four weeks. The head will sit on top of its Lightning and Thunder arrays, providing access to data from IP networks. With the hardware product lines in place ? and HDS figures that with refreshes, they're good for a year or two ? building a software business is HDS's chief goal.

The company did $50m in software sales last quarter and it plans to introduce new software every quarter for the next 12 months. Its strategic partners are Veritas Software and, to a lesser extent, Microsoft.

HDS's aim is to be first to market with a virtualization product that enables a user to not only see, but also to manage any storage devices on a network, be it HDS's or third-party equipment. That vision is 18-24 months off. The company will buy where it needs to ? and is currently scooping out startups ? to add value to the micro code it's developing in conjunction with Veritas.

First out of the block, HDS will address usability, where it admits it trails behind EMC. The leaping off point for much of the work is its High Command management protocol product ? due out in the next few months ? which will enable users to see and use all of their storage management applications from a single, graphical console.

HDS claims it continues to pick up competitive wins against market leader EMC, and touts ABN Ambro, Qwest, Morgan Stanley, SBC Services, Credit Suisse First Boston and Zurich Insurance as its latest scalps. Most were IBM replacements, HDS said, which it won in bake-offs against EMC.

The company declined to comment on reports that it has ousted Sun Microsystems's T3 storage at Sun poster child customer eBay, which is said to have installed HDS Thunder arrays. HDS said it doesn't comment until its customers do.

HDS, which last year lost German reseller Comparex to EMC, said, "It's the best thing that could have happened," adding that it did more business through its own German sales in the month of March than Comparex did in the entire year 2000.

It's widely held that HDS's increasing exposure to Wall Street is the pre-amble to being spun out from parent Hitachi. HDS claims that no formal decision has been taken yet.

In its year to March 31, HDS did $1.2bn revenue in storage, or 75% of the US group's $1.6bn total revenue. This compares with $774m out of $1.5bn in the previous year. The company said it recorded over $100m more profit this year than last. Indirect sales, including Hewlett-Packard, account for 25% of business.

Revenue growth should come in at between 25% and 30% overall for the coming year, while storage will achieve 80% to 100% growth.

HDS estimates its enterprise market share to be between 20% and 25%. It claims it has ousted IBM to become the No.2 enterprise storage vendor, behind EMC.

As for future technology such as SCSI-over-IP, HDS said its enterprise customers have told it there's no way they are going to be putting their mission-critical data onto their corporate Web networks.

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