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Hitachi Data Systems History

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Hitachi Data Systems Corporate history

Hitachi Data Systems (HDS) was founded in 1989 when Hitachi and Electronic Data Systems (EDS) acquired National Advanced Systems (NAS) from National Semiconductor and renamed it Hitachi Data Systems. But prior to that, the origins of the company had a history that stretched back to Itel, an early player in the mainframe market. Itel’s Computer Products Group sold National Semiconductors' IBM-compatible mainframes, and in 1979 National Semiconductor took it over and formed National Advanced Systems (NAS). NAS shifted from manufacturing mainframes and began marketing systems from Hitachi. Then, in 1999, Hitachi bought out EDS’s share, and HDS became a wholly-owned subsidiary of Hitachi. For many years, HDS sold both Hitachi IBM-compatible mainframes and storage systems, but in 2000 exited the mainframe business and shifted its focus to enterprise storage.[1]

Origins as Itel

[2][3] Itel was an equipment leasing company founded in 1967 by Peter Redfield and Gary Friedman, initially focusing on leasing IBM mainframes. Through creative financial arrangements and investments, Itel was able to lease IBM mainframes to customers at costs below what customers would have paid IBM, making them second to IBM itself in revenues due to leasing of IBM mainframes.

A joint venture between National Semiconductor and Hitachi formed in 1977 was contracted by Itel to manufacture IBM-compatible mainframes branded as Advanced Systems. In the face of initial success of having shipped 200 such systems and netting profits of $73 million, Itel had increased their investments and personnel to market their Advanced Systems brand and hence committed themselves to long term contracts with National Semiconductor and Hitachi. While Itel had not expected quick change in semiconductor technologies, Charlie Sporck, CEO of National Semiconductor, saw opportunities by tempting Itel to longer term commitments in response to request by Itel for lower prices in order to compete with IBM. Itel succumbed to commitment.

National Semiconductor's Takes Over Itel's Advanced Systems

Thereafter, news was abound that IBM was releasing a new technologically superior line of computers, to which customers responded by holding back purchases causing Itel's inventory to build up drastically. Even though Hitachi had agreed to Itel's request to cut back on shipment, National Semiconductor was adamant in implementing what the industry had termed as National's blackmailing of Itel. In 1979, Redfield was forced to resign as CEO and National Semiconductor took over the whole of Itel Advanced Systems, including its sales and marketing team.

National renamed the division National Advanced Systems (NAS), assembling and selling IBM-compatibles with a CPU imported from Hitachi. National and Hitachi quite often depended on IBM's gradual and restrained roll-out of newer models to feed on IBM's technology and market share and hence NAS enjoyed occasional successes.

However, IBM's investments in semiconductor technologies gave them an edge in building more powerful computers at lower costs. They were also introducing the Unix operating system gradually into their computers. IBM had also introduced the Personal Computer. By 1985, competing technologies from Honeywell, Prime, NCR and Control Data were gradually being forced off the mainframe market. NAS, as well as Amdahl (the other IBM-compatible mainframe maker) was no exception to facing the technological and sales pressure from IBM.

In 1983, National Semiconductor and its subsidiary NAS were sued by IBM for $2.5 billion on charges of using computer technology stolen from IBM[4][5], as result of an investigation by the United States Government into National's collaboration with Hitachi in engaging in industrial espionage to obtain technology secrets from IBM, a case which illustrated the effects of desperation that the onslaught of IBM technology had on its competitors.

In 1983, NAS ceased the manufacture of its own line of mainframes (which had Hitachi processors) but became a reseller of Hitachi's mainframe and data storage products.

HDS Formed as Joint venture of Hitachi and EDS

On February 28, 1989, National Semiconductor and Hitachi announced their agreement that Hitachi and EDS would jointly acquire NAS for $398 million in cash[6], of which Hitachi would own 80%. Memorex Telex and National had earlier, on January 10, 1989, announced plans on a joint venture "under which each company would own half of the unit and National would get $250 million plus four million shares of Memorex Telex". However, National proceeded to negotiate with Hitachi after Memorex's offer expired as National had felt that the Hitachi-EDS offer was a better deal as it entailed no further financial obligation or commitment on the part of National after the sale besides reaping a pre-tax profit of $200 million from the sale. By that time, Memorex Telex was able to arrange financing for the deal, but National had already accepted the Hitachi-EDS deal.

The acquisition was envisaged to provide Hitachi a better presence in the United States to compete with IBM. The entity was renamed Hitachi Data Systems.

Origins with Hitachi's Mainframe and Storage Products

Hitachi was founded in 1910 by Odaira Namihei in the village of Hitachi/Hidachi in Ibaraki Prefecture, Japan, naming the company after the village (now a city) in which it was founded. Hitachi manufactured the mainframes and storage systems sold by NAS and subsequently by HDS.

Hitachi Acquires EDS Stake

On 29 January 1999, Hitachi announced it would take over EDS' stake in HDS, appointing Jun Naruse as CEO of its new subsidiary. Naruse had been an engineer with the RAID Systems Division involved in storage systems development. Having total control of the company, Hitachi was able to infuse Hitachi Data Systems with its corporate culture, ethics and practices. Rather than perpetuating the fad of three-letter acronyms, Hitachi from then on preferred projecting the name of its subsidiary as "Hitachi Data Systems".

HDS Enters the Storage Era

On April 6, 2000 Hitachi Data Systems announced a strategic global transformation and re-organization to apply resources in a customer business-centric approach and focus on storage systems rather than mainframes. Shortly thereafter (June 26, 2000), the first product of the HDS’ storage era was unveiled, the high-end Freedom Storage Lightning 9900, featuring the Hi-Star crossbar switched architecture to interconnect memory, disks, servers and other external devices instead of the traditional bus architecture.[7] In addition to HDS sales, HP OEM’d [8]and Sun resold [9] the Lightning 9900 and succeeding generations, which featured additional advanced capabilities such as virtualization of external Hitachi and third-party storage systems to form storage pools.[10] Hitachi Data Systems high-end and mid-range modular storage systems complemented by a software portfolio that encompasses storage management, content management, business continuity, replication, data protection, and IT operations continue to challenge established storage vendors for leadership of the storage market.[11]

HDS Moves to the Cloud

Leveraging technology from its acquisitions of Archivas,[12] ParaScale,[13] and BlueArc,[14] HDS has been moving to the cloud over the last few years, culminating with the announcement on October 25, 2011 of its Information Cloud Roadmap, Cloud Services, and Cloud Solution Packages.[15]

See also

References

  1. ^ "Vendor profile: Hustling Hitachi Data Systems has EMC in its sights". Computerworld Storage Network World Online. Retrieved 2009-01-21.
  2. ^ "National Semiconductor Corporation". Funding Universe.
  3. ^ "Sierra Adds Power to I.B.M". The New York Times. February 13, 1985.
  4. ^ AP (November 16, 1983). "I.B.M. SUIT MAY ASK $2.5 BILLION". The New York Times.
  5. ^ Peter Carey (May 22, 1983). "The selling of IBM secrets". Boca Raton News.
  6. ^ LAWRENCE M. FISHER (February 28, 1989). "Partners Buy A Computer Subsidiary". The New York Times.
  7. ^ "Hitachi ups stakes in storage race". CNet. Retrieved 2011-12-12.
  8. ^ "HP Extends Hitachi Resale Agreement". Eweek. Retrieved 2011-12-09.
  9. ^ "Sun UPS Storage Presence". CRN. Retrieved 2011-12-12.
  10. ^ "Hitachi Updates TagmaStore". Computerworld. Retrieved 2011-12-09.
  11. ^ "Hitachi Data Systems: A storage giant lost in translation". The Register. Retrieved 2011-12-09.
  12. ^ "Hitachi acquires Archivas". InfoStor. Retrieved 2011-12-12.
  13. ^ "Hitachi Data Systems buys Parascale, gets more 'cloudy'". techtarget. Retrieved 2011-12-12.
  14. ^ "Hitachi Data Acquires BlueArc in Big Data Deal". Data Center Knowledge. Retrieved 2011-09-20.
  15. ^ "Hitachi unveils roadmap for cloudy offerings". Channel Register. Retrieved 2011-12-12.


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