HDS Metamorphisis: From Storage 5th to IoT 1st

LAS VEGAS: HDS is dead. Long live Hitachi Vantara.

By combining its former storage/IT business unit (origins date back to 1979, but debuted as HDS in 1989) together with ( acquired in 2015) and Insight Group ( products and services, i.e. 1.0, formed in 2016: ), $81 billion is repositioning HDS from a fifth-place finish in to first place in the /IT/IoT space. In addition to launching the reorganization at Hitachi NEXT 2017 in front of more than 2,000 attendees and more thousands online, the new and improved IoT business unit draped itself in most of IT’s — and business’ — hot buttons, including Big Data and analytics, , containers, appliances and converged infrastructure.

Although HDS was recently upgraded from Challenger to Leader in Gartner’s 2017 Magic Quadrant for Solid-State Arrays, the hottest segment in enterprise storage, and the unit was contributing around 20% of Hitachi’s revenues, it has been on a downward trend the last couple of years. The overall enterprise storage market grew only 2.9% last quarter (to $10.8 billion), and fifth-place HDS accounted for only $413 million, down 3.8%, and well behind first-place HPE and second-place Dell EMC. A year ago it had 5.7% of the enterprise storage market revenues, while two years ago it had a 7.8% share of worldwide external storage revenue during the quarter.  

While storage is stuck in commodity hell and HDS appears to be falling behind, IoT is experiencing exponential growth. Back in February Gartner predicted 8.4 billion things will be connected in 2017, up 31% from a year ago. That’s almost $2 trillion on endpoints and services this year, and we’re looking at 20.4 billion connected things by 2020,  with hardware spending expected to reach almost $3 trillion.

IDC is not as optimistic, putting the IoT market at just under $1.4 trillion by 2021. That may be less than half of Gartner’s forecast, but it still represents an incredible opportunity for Vantara, which is pushing a more holistic approach than most of its competitors. “The true value of IoT is being realized when the software and services come together to enable the capture, interpretation, and action on data produced by IoT endpoints,” said Carrie MacGillivray, vice president, Internet of Things and Mobility at IDC.”

The tagline for NEXT was ‘Lead What’s Next’, that was reinforced by another, more enduring Hitachi theme, ‘Double Bottom Line’, marrying the drive for business success together with . The launch of Ventara “marks a monumental change for Hitachi”, said Hitachi, Ltd. president and CEO Toshiaki Higashihara, in his keynote on Tuesday.

The company was founded in 1910 and has 107 years of operational technology experience and over 50 years in IT, he said. “We will be able to provide from consulting to end delivery… [and our] goal is to be the IOT innovation partner.”

Vantara brings together data management, analysis and industry expertise, said Higashihara. “The new company is focused on bringing data-driven products to the market.”

It would appear that the biggest hurdle before Vantara and its parent is ignorance. In talking to customers, the constant refrain was either “Wow”, or “I didn’t know that”, said Brian Householder, Vantara president and COO. Sometimes, the customers combined both into one sentence when they were informed of all of the depth and breadth of the organization, particularly when it came to AI, machine learning and automation.

The new company is starting with a good base of more than 10,000 customers, and an 81% share of the Global 100, he added. The two-day-old business is also a good example of the digital transformation sweeping the world, with software and services now representing 60% of its solutions, almost triple the share of a few years ago.

The result is a dominant position in the intersection of OT, IT and IoT. “Only we can do OT and IT like this,” said Householder. “I think that everyone understand that now is the time to transform.”

Almost a year ago Mark Peters, ESG Practice Director and Senior Analyst (Storage), Enterprise Strategy Group, enthused about the possibilities of leveraging Hitachi’s 106 years in OT and 57 years in IT to address the massive emerging IoT need/opportunity, and becoming the ‘glue’ for many large undertakings for decades hence. However, he cautioned, ‘explaining this will be both a challenge and opportunity for Hitachi – especially for those of us whose geography and vertical focus lead us to think of Hitachi in a more limited sense…..to me and many in IT that has been HDS.’

Ultimately, he thought the company ‘not only sees but understands this conundrum: the interconnections and improvements afforded by data and IT’. ‘Other vendors of scale may take on similar projects, but often they will do so as more of a lead contractor, whereas Hitachi is manifestly many of the sub-contractors rolled into one.’

Next week I’ll take a closer look at what the future holds in store for Hitachi Vantara.

DISCLAIMER: Hitachi looked after airfare and accommodations.

Author: Steve Wexler

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