IBM, Hitachi Team to Take On EMC

Disk Drives and Virtualization

• By Chris McConnell
• 04/18/2002

IBM Corp. and Hitachi Ltd. said late Tuesday they formed two partnerships to better compete in the storage market. They announced they would work together to create enterprise storage technologies and combine their hard drive businesses into a single company.

The enterprise storage announcement is clearly targeted at EMC Corp’s dominance of the enterprise storage space. Big Blue and Hitachi – which both currently offer SAN cabinet units – will share research and co-develop open storage systems.

One particular area of focus is on storage virtualization, which allows administrators to pool disk drives in an array and create virtual partitions across the pool. Virtualization gives enterprises more flexibility in managing storage because storage can be dynamically allocated to applications or machines.

Virtualization often comes with a big downside, however. Enterprises that choose one vendor for a virtualization product are often locked into buying arrays and other hardware from that vendor because of compatibility issues. EMC, which dominates the market for high-end storage arrays, has been the prime beneficiary of vendor lock-in, so a joint development effort between two large vendors may advance open standards not tied to a single vendor.

Hitachi and IBM also agreed to merge each of its hard drive units into a single joint company. Hitachi will own 70 percent of the new organization and compensate IBM for the associated intellectual property. Each company expects to source most of its drives from the new outfit.

The hard drive business is one of the most mature businesses in the computer industry. Products are highly commodified, competing on price, and offer questionable opportunities for growth. Other companies have made new arrangements for their hard drive businesses in the past few years: Seagate Technology spun its disk drive business off as a private entity in 2000; and Quantum Corp. sold its hard drive business to competitor Maxtor Inc.