HDS-BlueArc Deal was Long Overdue, Analysts Say

Hitachi Data Systems (HDS) announced the acquisition of BlueArc Corporation today, taking in a company that develops and sells clustered NAS systems for storing and managing digital content and unstructured (file-based) data.  HDS completed the acquisition of BlueArc in an all-cash transaction.  The five year-long OEM partnership would provide customers the combination of innovative, highly scalable, high performance BlueArc network attached storage with Hitachi enterprise-class quality, reliability and support.

With such a long-standing relationship, this deal has been an expected one, as outlined by Wikibon Senior Analyst Stuart Miniman. “In general, this is a long overdue move – HP bought IBRIX, EMC bought Isilon and HDS has had an OEM agreement with BlueArc for a few years. There are changing requirements in the NAS space for scale-out architectures – since HDS already was a channel for BlueArc, this does not change the landscape.”

The deal will help further Hitachi’s transformation from traditional data centers into storing and managing digital content centers, where customers can seamlessly store, manage and access all data, content and information as a single pool.

BlueArc develops products for high-end file repositories, such as media and entertainment, genomics, Web 2.0, eDiscovery and oil and gas exploration, and is an expert in the area of file-based virtualization, built-in intelligent tiering, and automated data movement capabilities for unstructured data.

After the acquisition, Jack Domme, CEO, Hitachi Data Systems said, “The exponential growth of digital content, particularly unstructured content, has had a dramatic effect on all businesses, including the requirements on IT.

The collaboration between HDS and BlueArc started as far back as 2006.  HDS then signed a contract with BlueArc to provide BlueArc’s high end network storage products available to HDS’ sales people, as Louis Graya, an ex-employee of BlueArc, recalls.

The buy was a smart one for HDS, according to analyst Dave Vellante, founder of Wikibon. “Hitachi has OEM’d the BlueArc product for years with pretty good success. HDS could never really get traction with the NAS product from Hitachi, Ltd. and BlueArc was a company with a best of breed product that worked well for HDS. The deal makes a lot of sense for HDS as part of its unstructured data/content strategy,” Vellante says.

“I’m sure it was much cheaper than what EMC paid for Isilon (granted Isilon was a more mature company with a larger installed base). An interesting side note here is this leaves DDN as one of the few remaining high end competitors in this space.”

HDS has been capitalizing on its strategies and pricing on storage cloud infrastructure.  It has recently teamed up with Microsoft to provide new converged cloud systems. The combined data centers solutions include Hitachi Compute Blade 2000 and Hitachi Compute Blade 320 and cloud systems built on Microsoft hyper-V cloud along with converged platform for Microsoft Exchange 2010.

Hitachi, to strengthen its global presence, also partnered with VMware vSphere and VMware vFabric cloud application platform to assist financial institutions in various parts of the Asian continent.  Hitachi’s Private Cloud for Finance Institutes solution would provide cost effective solution to improve rigidity of system by providing virtualized infrastructures.

As per a report from IDC, by 2014 more than 83 percent of enterprise storage system capacity will be on file based data, which would be accounted up to 2.5 times that of the compound annual growth rate (CAGR) for block storage capacity. The partnership with BlueArc will provide Hitachi an important aspect of cloud expansion, as it’s an important player in the Big Data market. It will open the door for Hitachi to address the fastest growing segment of the storage space.