Hitachi Funds Mountain View

Hitachi Ltd.'s (NYSE: HIT; Paris: PHA) investment arm, the Hitachi Corporate Ventures Catalyst Fund, has made a sneaky investment in NAS software startup Mountain View Data Inc. (MVD) to speed up the development of MVD's server clustering and network storage software for Hitachi servers (see Hitachi Funds Mountain View Data).

The financial details of the investment were not disclosed, but sources close to Hitachi say MVD's latest round of funding was between $5 million and $10 million. It was led by Nippon Venture Capital Co. Ltd. (NVCC), and was joined by ADTX, a storage hardware vendor; Nissei Capital; Daiwa Bank; and Kokusai Capital, which manages the Hitachi-Kokusai Capital Number One Investment Enterprise Partnership fund. MVD says a follow-on round, expected to close in early May, will bring in another large Japanese corporate investor. MVD closed $3 million in its first round of funding in December 2001.

MVD was founded in October 2000, with offices in San Francisco, Tokyo, and Beijing. The company has a headcount of about 40 people and is headed by president and CEO Cliff Miller -- who got up at 4:30 a.m. Japanese time to talk with us about how MVD fits into the storage market.

"It's all about cost savings right now, not expensive, flashy hardware anymore," he says. MVD makes two products: PowerCockpit [ed. note: sounds pretty big and flashy to us!], which manages clusters of Intel-based servers; and MVD Powered NAS, a software kit for OEMs that converts PC servers into network attached storage (NAS) appliances. IBM Corp. (NYSE: IBM) has validated the software for its xSeries servers. MVD says it has "dozens" of OEMs and systems integrators in the U.S., although it's not allowed to name them (see MVD Buys TurboLinux Unit).

MVD's NAS software includes a journaling file system, a Web-based management console, online file system resizing, support for NFS, CIFS, and AppleTalk file sharing, MVD Snap for up to 225 snapshots, and NDMP backup support and synchronization for continuous replication over LAN, MAN, and WAN environments. The company is also integrating network-acceleration cards from Alacritech Inc. into its offering (see Alacritech Turns to Linux).Miller says MVD is displacing Network Appliance Inc. (Nasdaq: NTAP) at the high end of the market in Japan on price. The company partners with NewTek in Japan, which sells Intel Corp. (Nasdaq: INTC) servers running MVD's NAS software. "Users generally don't buy, but lease, NetApp machines in Japan, and when the end of the lease comes up they are looking for other alternatives," says Miller. "Quite a few are switching to MVD Powered NAS."

He estimates for the same cost as a year's lease for a standard NetApp filer, a company can purchase five NewTek machines running MVD NAS software. A large Japanese government agency looking to cut costs did just that and ditched its NetApp contract in favor of NewTek and MVD. Miller declined to provide pricing details, but it's an interesting niche and obviously one that has piqued Hitachi's interest.

Discussions have apparently been going on for some months around how the Japanese conglomerate can use MVD's software on its servers. "We are working with the server group to add PowerCockpit and they are also considering MVD Powered NAS," says Miller. We were unable to reach Hitachi officials in Japan by press time.

Miller says his company is also winning accounts that Microsoft Corp. (Nasdaq: MSFT) is missing with its Windows Server Appliance Kit (SAK), as MVD supports Unix and Linux, which Microsoft does not. Still, the Redmond-based software company has a footprint the size of a small country and is marching into the storage market at an ever-increasing pace. MVD's window of opportunity to compete with Microsoft could be shrinking (see Microsoft Gets NASty and Microsoft Grooms Windows for Storage).

That said, with Hitachi behind it MVD begins to look more threatening. Could the Japanese giant be preparing to enter the low-end NAS market in Japan? Maybe.Right now, its investment tosses up more questions than it answers. For one thing, Network Appliance just signed a major reseller deal with Hitachi Data Systems (HDS) for the U.S. and other non-Japan markets, so NetApp is probably wondering what HDS's parent company is up to. Time will tell how this complex relationship pans out, but for MVD it's clearly good news (see HDS OEMs NetApp: Big Deal?).

Jo Maitland, Senior Editor, Byte and Switch