Hitachi to go local

In the past, Hitachi Data Systems was content to operate in India through a liaison office. The booming Indian storage market has now convinced the company to set up a fully-owned Indian subsidiary says CHITRA PADMANABHAN

P p SUBRAMANIAN says that a direct presence in India will give Hitachi a whole new set of opportunities and scope for expansion

HITACHI Data Systems (HDS) is looking to establish a direct presence in India after the necessary government approvals are secured; the approvals are expected to come through in mid-July. If okayed, it would mean that HDS India would be recognised as a wholly-owned subsidiary of HDS. (When a company sets up a full-fledged office in India, it has to go through a series of regulatory formalities.) Ex-plains P P Subramanian, the India country manager at HDS, “A direct presence in India will give us a whole new set of opportunities and scope for expansion. We are revamping our channel strategy as part of this change.”

HDS India sees the current phase as a good opportunity for it to consolidate its operations. Though the company has managed to build an impressive client list and carved out a decent share of the Indian storage market for itself, the new move is expected to boost the confidence of customers. “As a subsidiary a company is expected to pump in a reasonable amount of investment, build a solid local infrastructure, and increase staff strength,” says Subramanian.

Channel as SI

On the channel front, HDS has embarked upon a dual strategy. Initially the company plans to leverage its vast network of channel partners and gradually empower them to deal directly with the end-customer. As of now, the company has three channel partners—Wipro, Apara and the recently-appointed Ingram Micro. “For the first three years we worked with Wipro and Apara. When we decided to expand in B- and C-class cities, we appointed Ingram Micro. Today we work through 60 partners of Ingram in the Tier-2 segment,” says Subramanian.

Looking at the trends in the channel segment, it is clear that distributors are gradually moving away from the ‘box-pusher’ mould and transforming themselves into system integrators (SIs). HDS is cashing in on this, and helping its channels add value to the end-customer. Not surprisingly, the company’s primary focus is on making the channel self-reliant.

According to Subramanian, there can be two approaches to the company’s channel strategy. Either HDS can try and reach the customer directly or let the channel be the front-end. The first option has its inherent limitations which is why HDS is primarily positioned as a channel-driven company and is focusing its efforts on training the channel. At present, its Tier-1 partners (Ingram Micro, Wipro and Apara) have access to the company’s intranet for regular information updates. HDS’ next move is to pull together the Tier-2 distribution channel as an integral part of the company’s infrastructure. “It is challenging to educate Tier-2 partners since their customers primarily fall under the price-sensitive SME (small and medium enterprise) category,” states Subramanian.

In the enterprise space, the company has an OEM (original equipment manufacturer) arrangement with HP and Sun which contribute the major chunk of its business. But in the SME segment, HDS is in direct competition with HP and Sun, which is a complete paradigm shift for the company. “About 40 percent of HDS India’s business comes from the small business segment, and we are looking to double this revenue every year, building our business model in such a way that at a later stage [by 2006] approximately 60 percent of our business will come from SMEs,” discloses Subra-manian. While HDS India currently holds only two percent of the SME market, Subramanian expects the company to capture close to six percent by the end of fiscal 2004-05.

The concerns in the SME segment are different from those of the high-end segment. SMEs tend to be more dependent on the SI for service and support. The emphasis on SMEs will help HDS build its brand. The company has the Thunder 9500V series of storage solutions to address the needs of this segment; this series starts from 200 GB and goes up to 30 TB. Meanwhile, in the enterprise segment, the company plans to continue working with its OEM partners to ensure steady growth.

Changes are coming

HDS India’s current focus is on the mid-size and high-end storage market. It expects the formation of an Indian subsidiary to help it penetrate the SME segment with a focused channel strategy. The company expects income accruing from SMEs to account for 60 percent of its total revenues by 2006.

Hitachi’s client list
Features of High-End Storage To run mission-critical applications; 24/7 operations; High-performance, High-availability of data consolidation	High-End Storage Client List VSNL HDFC Bank ICICI Bank ABN Amro IDBI Bank Infosys NIC ONGC Citibank Idea Mobile Reliance	Features of Modular Storage (Mid-End) Cost-effective SAN solutions; High-performance, Easy management	Mid-End Storage Client List Patni TCS Arvind Veritas Intel HFCL Spice HDFC Bank Infosys

chitra@expresscomputeronline.com