HDS restructures again to arrest falling market share

Reacting to a further slide in its market share, Hitachi Data Systems (HDS) has again restructured globally, dividing into two independent companies at the expense of 600 jobs.

The company will be split into two separate companies: a platform-specific company called HDS, and an independent systems integration company called Hitachi Data Systems Solutions (HDSS).

Each company will have its own profit-and-loss responsibility and will report to Hitachi Data Systems Holding Company, which is incorporated in the US.

Hitachi's latest action comes on the heels of its recent decision to scale back production of its mainframe systems. The company held a 21 per cent market share as recently as 1997, but it dropped back to 14 per cent in 1998. It did even worse last year, in a field that includes IBM and Amdahl, according to market research firm Meta Group.

It is the company's second major reorganisation in 18 months, as it desperately seeks a turnaround in market performance.

In November 1998, the company cut 400 jobs worldwide as part of a corporate realignment focusing on services, OEM programs and the non-mainframe space (Computerworld, December 4, p1).

Commenting on HDS' latest restructuring, Mike Kahn, an analyst at US-based The Clipper Group, said "it makes a lot of sense... because they were not achieving the success [selling mainframes] they were hoping to".

The reorganisation "frees Hitachi from being just a product vendor to being more of a product integrator, delivering solutions that might in fact have little to do with their traditional core products", Kahn added.

Meanwhile, Greg Cornfield, managing director of HDS Australia, described it as "a logical move, especially from a geographic perspective, to combine our Asian regions as there is a lot of duplication of functionality especially in the back office area".

Cornfield said there will be some local redundancies but a final tally will not be determined until the end of the month.

Most of Hitachi's mainframe and storage business will now be housed under HDS, which will comprise six business units:

* Platform Solutions, which will be responsible for software, services and storage-area networks;* A platform channel unit that will sell not only Hitachi's hardware and software, but also technology from other vendors, such as Brocade Communications Systems and Cisco Systems, and Hewlett-Packard;* A business unit that will sell Hitachi servers and service to other vendors;* A 700-person customer-service organisation that will offer a range of configuration, delivery and installation service for Hitachi's own customers, as well as those from other vendors;* An information technology services group, comprised of Hitachi's 50-person internal IT organisation that will sell a range of services, including application-hosting services, and* An incubator business unit focused on finding new opportunities for HDS.

Hitachi's newly formed solutions company will continue providing business consulting, application-layer services and systems integration services.

Dave Roberson, chief operating officer at HDS, said most of the positions being made redundant are administrative roles.

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