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December 11, 2006

HDS and BlueArc confirm OEM deal

As Computer Business Review predicted on December 5, Hitachi Data Systems has announced a five-year OEM deal with very high-end NAS vendor BlueArc Inc, enabling the Japanese group's international storage business to Hitachi-label BlueArc's Titan boxes.

By CBR Staff Writer

Mike Gustafson, CEO of San Jose, California-based BlueArc, said the deal would enable his company’s devices to enter the more mainstream enterprise market where HDS is a major player. It will also leave BlueArc to plough its own traditional furrow in sectors with high-performance computing (and thus storage) requirements, with life sciences, media and entertainment, internet services and oil and gas as its big four, followed by the high-performance demands for horizontal enterprise.

The deal is directly with HDS, of course, which means that the latter’s own OEM partners HP and Sun won’t be involved. It will be interesting to see how much it impacts the Japanese vendor’s top line, in fact. At the moment direct sales vis-a -vis those made through OEM partners are about 50% of the total, so with the BlueArc boxes that percentage may go up somewhat. Admittedly, BlueArc only plays in the $100,000-and-up segment, but HDS has a lot of enterprise customers who may be looking for such boxes and whom it will now be able to offer a serious alternative to NAS market leader Network Appliance.

The announcement comes a week after BlueArc announced the successful conclusion of litigation with NetApp, the lawsuit brought by the latter in 2003 havinng been thrown out of court in November.

BlueArc has always marketed its offering as a high-performance, more scalable alternative to NetApp. Our competition requires 14 boxes to do the same thing we do with two, Gustafson claimed. So we can offer scale-up to their scale-out, with all the management challenges that represents.

Of course, HDS themselves had a relationship with NetApp at one stage, but then in 2005 it launched homegrown NAS blades for its flagship TagmaStore block-level disk array, and has since followed up with NAS blades for its mid-range disk arrays. Meanwhile NetApp unveiled a reseller deal with another heavyweight in the storage systems market, IBM.

In effect, this deal consolidates the situation in which the high-end NAS market is a three-horse race, with NetApp leading under its own steam and through IBM, challenged on the one hand by BlueArc with HDS and on the other by EMC.

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