Price erosion hits Hitachi Data Systems hard

Hitachi Data Systems Corp. (HDS) announced it will lay off 400 of its 2,750 employees, a workforce reduction expected to affect the company's business units across the board, the company said yesterday.

The layoffs are necessary because HDS has been suffering from plummeting prices in the S/390-compatible mainframe market, a company spokesman said today. The price erosion, estimated at 3 percent a month by HDS, caused the company's revenues to remain flat at US$2 billion [B] in fiscal year 1998 -- the same amount registered in fiscal year 1997 -- despite a 30 percent rise in units shipped, the HDS spokesman said.

The company is looking at entering the Unix and Windows NT server markets, he said. Additionally, HDS is also considering selling more of its storage products -- which are available for multiple platforms -- through the indirect sales channel, the company spokesman added.

In a statement released yesterday, Yoshihiru Koshimizu, chairman of the HDS executive committee, hinted at these changes.

"While still maintaining a first-rate S/390-compatible sales and service operation, the new HDS will also invest in more resources in new areas of opportunity, more features on more platforms, and more associated services," Koshimizu said.

HDS, owned by Hitachi Ltd. and Electronic Data Systems Corp. (EDS), is based in Santa Clara, California, and can be reached at http://www.hds.com/.

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