Hitachi Teams With IBM, Spars With EMC

Taking aim at industry leader EMC , Hitachi and IBM will merge their hard disk drive (HDD) operations into a new standalone joint
venture whose annual sales could eclipse $4 billion.

Additionally, the companies have inked a multi-year pact to develop new data storage networks, systems and software.

Details are still being hammered out, but Tokyo-based Hitachi is expected to hold 70 percent of the yet unnamed spinout and make a payment to Armonk,
N.Y.,-based Big Blue for its HDD assets.

The company will be based in San Jose, Calif., and sales for the unit are expected to range between $3.8 billion and $4.6 billion, according to executives. The
research, development and manufacturing operations as well as sales and marketing will be combined.

“With the top-quality hard-disk drive and RAID hardware made possible through this alliance . . . we
will strive to be a world leader in this increasingly competitive industry,” said Yoshiro Kuwata, a Hitachi vice president.

Hitachi and IBM will continue to drive interoperability and open standards for the management of multi-vendor networks — a key requirement for customers who
want their high-priced equipment to work in concert.

“Open standards will speed the pace of innovation and each company’s ability to deliver powerful, cost-effective storage systems and networking technology to the
enterprise,” said Nicholas Donofrio, an IBM vice president. “Vendors that stay on the proprietary path risk being left behind.”

Hitachi and IBM have a collaborated before. Most recently, the two companies have conducted joint development and manufacturing activities in server operations.

Meanwhile, Hitachi has responded EMC’s charges of patent infringement. Last week, EMC petitioned the U.S. International Trade Commission to block rival Hitachi Data
Systems and its parent from importing three products. It also sued Hitachi in U.S. District Court for unspecified damages.

Now, Hitachi is hitting back, saying EMC’s case is without merit and vowing to defend itself.

“Hitachi is committed to providing that competition to the marketplace with best of breed superior products and services while continuing to respect the intellectual
property of all competitors,” said Isao Ono, a Hitachi senior corporate officer. “It is unfortunate that EMC has chosen to compete in the courtroom rather than in the
marketplace.”

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