http://online.wsj.com/article/SB10000872396390443768804578037452639732428.html

October 8, 2012

Sorting Out a Boundless World of Big Data

Managing enormous amounts of data is a major challenge world-wide for businesses today. The data volume keeps increasing while digital content becomes more diverse, with each upgrade to computers and mobile devices contributing to the expansion.

As senior vice president of Hitachi Data Systems Ltd., Kevin Eggleston works at the forefront of the "Big Data" challenge, as his company provides storage systems that help clients keep all the information organized, accessible and potentially useful.

In the market for data-storage systems, Hitachi Data Systems, a U.S.-based wholly owned subsidiary of Japanese technology conglomerate Hitachi Ltd., faces competitors such as EMC Corp., International Business Machines Corp. and Hewlett-Packard Co. The global market for enterprise data-storage systems is already valued at more than $30 billion, according to IDC, which expects the industry's annual growth to remain stable within a 4%-6% range over the next five years.

Mr. Eggleston says his company's success in the competitive market for data-storage systems will depend on how much it can help its clients use their data to their advantage.

Hitachi Data Systems, based in Santa Clara, Calif., accounts for about 90% of the Hitachi group's storage-solutions business in terms of revenue. In the last fiscal year through March, revenue in that business segment rose 15% to $4.44 billion, with an operating margin of about 8%.

Mr. Eggleston sat down with Juro Osawa to talk about opportunities and challenges for his company, and what's next for the data-storage industry.

The following interview has been edited.

WSJ: As demand for data storage and management keeps growing, how has your business changed?

Mr. Eggleston: We are transforming from a hardware-oriented company into a software and services company. Our big emphasis now is on services, and that reflects the changes in our customers' expectations. The explosion of data makes investment on information infrastructure very capital-intensive. Instead of buying their own storage infrastructure, many companies want to buy it as a service. So our company is turning into a much more services-oriented company.

There is also a need to turn data into value—not just the data you own and control, but also data from social-networking services, blogs or anything else that could be turned into an opportunity. Businesses need to go through all that information and learn very quickly from what people are saying about their products and services, so they can use that information as a competitive advantage.

WSJ: What are some new areas where data management is becoming more important?

Mr. Eggleston: The world is changing with more immediate and universal access to information, whether you are a farmer wanting to have good access to weather data and commodity pricing, or a doctor who needs to have very fast access to patient data to make a good diagnostic decision.

In Hong Kong, for example, the hospital authority is moving toward electronic patient-health records using cloud computing so that the data is completely shareable. You walk into any hospital and have access to your medical and health records.

In the entertainment industry, you see the popularity of movies with so much digital animation and 3-D effects. Historically, production companies had to invest in a lot of infrastructure to make such movies. One of the trends we are seeing is that they are starting to use service providers that offer the infrastructure for digital post production and other work.

What's enabling all of this is vastly improved computing capabilities as well as reduced costs of data storage.

WSJ: How do you differentiate your products and services from your competitors'?

Mr. Eggleston: Traditionally, there was always structured data like a person's name and address. But now there is so much unstructured content such as photos or videos of the person, or something the person has posted online.

With our own technology and partnerships with other companies that provide data analytics services, we will take all the accessible information and turn that into value.

WSJ: How is the economic environment affecting the data-storage industry?

Mr. Eggleston: Last year was the best year that I've seen in my 35-year career in this industry. This year, the market's growth will be slower than last year, with the debt crisis in Europe and the slowdown in the U.S. and China.

The economic slowdown has a particularly big impact on spending at governments and financial institutions. Banks are big spenders in the data-storage business, and the impact of the economic crisis is prominent.

But we learned how to deal with an economic slowdown during the global financial crisis in 2008 and 2009. This time, it's sort of a déjà vu.

If our clients can't buy more [products], we are going to help them get more out of what they already have.

WSJ: What's your view on the data-storage industry's outlook?

Mr. Eggleston: The industry will continue to grow, even though the rate of growth may vary over time depending on the economic climate. New mobile gadgets with higher-resolution screens will produce more data, and a new MRI machine will produce more data.

The continued expansion creates the need to store and manage the data and look for ways to turn it into value. That has become a fact of life.

WSJ: How is your relationship with your parent company, Hitachi Ltd.?

Mr. Eggleston: We are one of the fastest-growing businesses in the Hitachi group and that has caught the parent company's attention. We've been working more closely with Hitachi's management and we've become a more meaningful growth engine for the group.

Information infrastructure is an important component of the Hitachi group's focus on social infrastructure business, which also includes electric power, transportation and other operations.

As the Hitachi group tries to globalize its business, Hitachi Data Systems is seen as an engine of globalization. We are based in Silicon Valley and our executives are mainly American. We are a non-Japanese subsidiary and our business is 100% global.

Resume

Education: Bachelor's in international business from the University of Colorado.

Career: Mr. Eggleston was promoted to senior vice president of Hitachi Data Systems in 2009. He joined the company in 2005 as western region vice president in its Americas sales division. He spent 24 years at StorageTek, with international field positions in Latin America and Asia-South-Pacific. He also managed U.S. and international regions for more than two years at BlueArc.