Hitachi Data Systems History
Encyclopedia
Hitachi Data Systems Corporate history
The current Hitachi Data SystemsHitachi Data Systems
Hitachi Data Systems is a company providing mid-range and high-end storage systems, software and services. It is a wholly owned subsidiary of Hitachi Ltd. and part of the Hitachi Information Systems & Telecommunications Division....
(HDS) was founded in 1989 when Hitachi and Electronic Data Systems (EDS) acquired National Advanced Systems (NAS) from National Semiconductor and renamed it Hitachi Data Systems. But prior to that, the origins of the company had a history that stretched back to Itel, an early player in the mainframe market. Itel’s Computer Products Group sold National Semiconductors IBM compatible mainframes, and in 1979 National Semiconductor took it over and formed National Advanced Systems (NAS). NAS shifted from manufacturing mainframes and began marketing systems from Hitachi. Then, in 2000, Hitachi bought out EDS’s share, and HDS became a wholly owned subsidiary of Hitachi. For many years, HDS sold both Hitachi IBM-compatible mainframes and storage systems, but in 2000 exited the mainframe business and shifted its focus to enterprise storage.
Origins as Itel
Itel was an equipment leasing company founded in 1967 by Peter Redfield and Gary Friedman, initially focusing on leasing IBM mainframes. Through creative financial arrangements and investments, Itel was able to lease IBM mainframes to customers at costs below what customers would have paid IBM, making them the second to IBM itself in revenues due to leasing of IBM mainframes.A joint venture between National Semiconductor
National Semiconductor
National Semiconductor was an American semiconductor manufacturer, that specialized in analog devices and subsystems,formerly headquartered in Santa Clara, California, USA. The products of National Semiconductor included power management circuits, display drivers, audio and operational amplifiers,...
and Hitachi
Hitachi
Hitachi is a multinational corporation specializing in high-technology.Hitachi may also refer to:*Hitachi, Ibaraki, Japan*Hitachi province, former province of Japan*Prince Hitachi and Princess Hitachi, members of the Japanese imperial family...
formed in 1977 was contracted by Itel to manufacture IBM-compatible mainframes branded as Advanced Systems. In the face of initial success of having shipped 200 such systems and netting profits of $73 million, Itel had increased their investments and personnel to market their Advanced Systems brand and hence committed themselves to long term contracts with National Semiconductor and Hitachi. While Itel had not expected quick change in semiconductor technologies, Charlie Sporck, CEO of National Semiconductor, saw opportunities by tempting Itel to longer term commitments in response to request by Itel for lower prices in order to compete with IBM. Itel succumbed to commitment.
National Semiconductor's taking over Itel's Advanced Systems
Thereafter, news was abound that IBM was releasing a new technologically superior line of computers, to which customers responded by holding back purchases causing Itel's inventory to build up drastically. Even though Hitachi had agreed to Itel's request to cut back on shipment, National Semiconductor was adamant in implementing what the industry had termed as National's blackmailing of Itel. In 1979, Redfield was forced to resign as CEO, and National Semiconductor took over the whole of Itel Advanced Systems, including its sales and marketing team.National renamed the division to National Advanced Systems (NAS), assembling and selling IBM-compatibles where the CPU was imported from Hitachi. National and Hitachi quite often depended on IBM's gradual and restrained roll-out of newer models to feed on IBM's technology and market share and hence NAS enjoyed occasional successes.
However, IBM's investments in semiconductor
Semiconductor
A semiconductor is a material with electrical conductivity due to electron flow intermediate in magnitude between that of a conductor and an insulator. This means a conductivity roughly in the range of 103 to 10−8 siemens per centimeter...
technologies gave them an edge in building more powerful computers at lower costs. They were also introducing the Unix
Unix
Unix is a multitasking, multi-user computer operating system originally developed in 1969 by a group of AT&T employees at Bell Labs, including Ken Thompson, Dennis Ritchie, Brian Kernighan, Douglas McIlroy, and Joe Ossanna...
operating system
Operating system
An operating system is a set of programs that manage computer hardware resources and provide common services for application software. The operating system is the most important type of system software in a computer system...
gradually into their computers. IBM had also introduced the Personal Computer
Personal computer
A personal computer is any general-purpose computer whose size, capabilities, and original sales price make it useful for individuals, and which is intended to be operated directly by an end-user with no intervening computer operator...
. By 1985, competing technologies from Honeywell, Prime, NCR and Control Data were gradually being forced off the mainframe market. NAS, as well as Amdahl
Goddard Space Flight Center
The Goddard Space Flight Center is a major NASA space research laboratory established on May 1, 1959 as NASA's first space flight center. GSFC employs approximately 10,000 civil servants and contractors, and is located approximately northeast of Washington, D.C. in Greenbelt, Maryland, USA. GSFC,...
(the other IBM-compatible mainframe maker) was no exception to facing the technological and sales pressure from IBM.
In 1983, National Semiconductor and its subsidiary NAS was sued by IBM for $2.5 billion on charges of using computer technology stolen from IBM, as result of investigation by the United States Government into National's collaboration with Hitachi engaging in industrial espionage to obtained technology secrets from IBM, a case which illustrated the effects of desperation the onslaught of IBM technology had on its competitors.
In 1983, NAS ceased the manufacture of its own line of mainframes (which had Hitachi processors) but became a reseller of Hitachi's mainframe and data storage products.
HDS formed as joint venture of Hitachi and EDS
On February 28, 1989, National Semiconductor and Hitachi announced their agreement that Hitachi and EDSEDS
- Education :* Educational specialist , a terminal academic degree in the U.S.* Episcopal Divinity School, an Episcopal Seminary in Cambridge, Massachusetts* Evansville Day School, an independent college-prep school in Evansville, Indiana- Politics :...
would jointly acquire NAS for $398 million in cash, of which Hitachi would own 80%. Memorex Telex and National had earlier, on January 10, 1989, announced plans on a joint venture "under which each company would own half of the unit and National would get $250 million plus four million shares of Memorex Telex". However, National proceeded to negotiate with Hitachi after Memorex's offer expired as National had felt that the Hitachi-EDS offer was a better deal as it entailed no further financial obligation or commitment on the part of National after the sale besides reaping a pre-tax profit of $200 million from the sale. By that time, Memorex Telex was able to arrange financing for the deal, but National had already accepted the Hitachi-EDS deal.
The acquisition was envisaged to provide Hitachi a better presence in the United States to compete with IBM. The entity was renamed Hitachi Data Systems.
Origins with Hitachi's mainframe and storage products
HitachiHitachi
Hitachi is a multinational corporation specializing in high-technology.Hitachi may also refer to:*Hitachi, Ibaraki, Japan*Hitachi province, former province of Japan*Prince Hitachi and Princess Hitachi, members of the Japanese imperial family...
was founded in 1910 by Odaira Namihei in the village of Hitachi/Hidachi
Hitachi, Ibaraki
is a city located on the Pacific Ocean in Ibaraki Prefecture, Japan. Its name could be directly translated as "sunrise", but probably more appropriately adapted to "prosperous wealth" .-Demographics:...
in Ibaraki Prefecture
Ibaraki Prefecture
is a prefecture of Japan, located in the Kantō region on the main island of Honshu. The capital is Mito.-History:Ibaraki Prefecture was previously known as Hitachi Province...
, Japan, naming the company after the village (now a city) in which it was founded. Hitachi manufactured the mainframes and storage systems sold by NAS and subsequently by HDS.