HDS Joins M&A Game

4:40 PM -- Its hard to be surprised by any storage acquisition these days, unless Hitachi Data Systems (HDS) is involved.

HDS stayed on the sidelines the past few years during storage’s M&A mania, until picking up archiving software startup Archivas today. (See Hitachi Pockets Archivas.) So is HDS changing its stance on acquisitions, or was Archivas just too good to pass up?

Archivas gives HDS the opportunity to make inroads in a market that is growing because of retention and compliance needs. It also provides a chance to dig into archrival EMC’s commanding share of that market.

Even before they started partnering with Archivas last year, HDS execs made it clear they considered Archivas’s open software superior to EMC’s proprietary content addressable storage (CAS) approach. (See Hitachi Heads for the Archives.) Today, they repeated how Archivas gives them a chance to crash the CAS party that EMC has had almost to itself for four years.

But they wouldn’t go much further on their acquisition strategy. They won’t even admit that HDS has been a reluctant acquirer.“I look at this more as an Hitachi storage group acquisition,” says John Mansfield, VP of product management for HDS. “We’ve done acquisitions before.”

He pointed to Hitachi’s 2003 merger with IBM Storage Technology Business to form hard drive vendor Hitachi Global Storage Technologies (HGST), and HDS’s pickup of SRM startup Comstock in 2002. (See Hitachi Pulls a Soft One.)

Okay, that’s a track record of three acquisitions in five years, counting Archivas.

Don’t expect the Archivas deal to open floodgates, but we might see a trickle. The two companies HDS has bought since 2002 have already been partners: Archivas had an OEM deal with HDS, and Comstock developed SRM almost exclusively for Hitachi's hardware platforms.

So it should be no surprise if HDS goes after BlueArc if the two firms' recent NAS OEM deal works out. (See HDS, BlueArc in Big NAS Deal.) And the storage world is still waiting for HDS to buy Sun’s old Pirus business unit and use the technology to add thin provisioning to its storage arrays. (See HDS PrepsTagmaStore, Ponders Sun.)“It’s definitely a good sign that HDS is starting to acquire companies,” says one Wall Street analyst who follows the company. “It could be a sign of desperation, too. They didn’t really have much of a choice -- archiving is hot, EMC and NetApp have very good archiving products, and HDS was missing out on deals. Therefore, it is no surprise that HDS actually went out and bought a company.”

Except for the desperation part, Hitachi execs won’t dispute that.“We’re going to go aggressively after this market,” Mansfield says of archiving. “We want to capitalize on a market growing at a clip of over 20 percent a year. We want to take share in a space that belongs predominantly to a single vendor with a proprietary product.”

That vendor is EMC with Centera, which got into the market first and has held its lead despite its cost, proprietary nature, and scaleability problems. Archivas founder and CTO Andres Rodriguez has maintained from the start that his approach to CAS was better than EMC’s. (See Ericsson Makes Cash Offer.) Now, as part of a big-time systems vendor, he’ll get a chance to prove it.

— Dave Raffo, News Editor, Byte and Switch