Sun enters high-end storage market through Hitachi

Sun Microsystems Wednesday formed a distribution agreement intended to increase its competitiveness with EMC in the high-end storage market.

The company announced a three-year global deal through which it will sell a co-branded product, StorEdge 9900 based on HDS Lightning 9900, which will use software from Sun and Hitachi Data Systems. The two companies said they would cross-license each other’s technology to further develop their storage products and invest in joint global mission-critical support centres. The companies did not indicate whether a centre would be created in Canada.

EMC already enjoys a leading market share position attaching storage devices to Sun servers. Mark Canepa, executive vice-president, Sun Network Storage, said the company would keep its existing T3 products in the mid-range while it pursues new territory.

“We really did not have the high-end big box,” he said. “Hitachi and EMC were plugging that hole.”

Hitachi Data Systems COO Dave Roberson said the partnership would reduce complexity of storage systems as well as the cost of ownership for enterprise customers.

“Alliances are great, but proof is at the customer level,” he said. “We’ve had many customers say they’d like us to work more closely with Sun.”

Canepa said Sun had received a similar reaction from its users.

“There wasn’t a customer I talked to that didn’t have praise for what Hitachi does,” he said. “In every case imaginable, it came out better against EMC.”

Sun executives said the deal was not a traditional reseller or OEM agreement but a distribution pact that would offer a single point of contact for customers requiring storage and software solutions. Both companies have channel programs, and the deal opens some potential channel conflicts. But Roberson, who said channel sales was growing more than any part of Hitachi’s business, was confident they would be addressed.

“We treat our sales force the same regardless of the channel it goes through,” he said. “Certainly Sun will be a partner extrordinaire from that perspective, but we will pay our folks the same whether it goes via the Sun channel or our channel.”

Zander said the company will use incremental gross margin dollars to fund further research and development in the areas of network storage, storage over IP and software.

Sun is entering the high-end storage market at a time when even EMC is weathering difficult economic conditions. Last week EMC said it was considering cutbacks in the wake of plunging gross margins in the second quarter. While pricing has since become much more competitive, Roberson said cost is not the most important factor for success.

“Customers will pay for solving their problems much more than giving them some megabytes or terabytes,” he said. “It’s more than a hardware relationship. Over time, the value we create at the customer level will be very high.”

Hewlett-Packard has been selling its own version of the Lightning system for the last two years, but Roberson saw little conflict there.

“The HP relationship is focused on storage, but Hitachi and HP have a different relationship,” he said. “We’re taking a channel-neutral approach.”

Zander said Sun is also working on a high-end version of the T3 for later this year.

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