Hitachi Data Systems New Zealand has sold a controlling stake in its Auckland data centre to the executives who set it up, freeing them to sell services to former competitors.The facility, built up by HDS New Zealand over the past three years, is now owned in a joint venture between former HDS NZ executives Roger Cockayne and Wayne Norrie and HDS US. The new company, HDSL (Hosting and Datacentre Services), is 51% owned by Cockayne and Norrie’s company, DB Emco. Cockayne wouldn’t say how much the pair had paid for their stake in the venture, saying that information could invite unwelcome attention from suitors. The joint venture will also operate HDS New Zealand’s storage hardware business, which has a couple of sales staff.
“We were starting to move away from the normal Hitachi model [of selling storage hardware],” says Cockayne, “and we suggested it would be easier for us to operate as a separate organisation.”
IDC New Zealand analyst Mike Cranna says the New Zealand data centre market, currently worth about $133 million, is split 75:25 between direct outsourcing and providing a utility-type service. The utilities data centre market, in which HDSL predominantly sees itself, is growing faster, says Cranna, and will represent 30% of data centre business by 2005. He says the biggest users of the utilities model are government and finance.
Cockayne says HDSL wants to provide IT infrastructure by direct outsourcing to customers or by supplying other service providers. For example, large service providers such as IBM, EDS and Unisys could use under their own brands, he says.
Cockayne cites a local tender where he was able to put in an offer of a hosted solution for $40,000 a month compared with an established services supplier’s bid of $131,000 a month. “I could’ve offered my solution to them [the major supplier] for $70,000 and everyone would’ve still come out on top.
HDS has spent $6 million on establishing the centre, which Cockayne says has returned $13 million. He says the establishment of the facility helped reverse an HDS NZ deficit of $10 million, built up over 10 loss-making years, to profit in each of the four years since.
The facility uses ISS technology for security from Datacraft, HP OpenView for network management, HP Intel servers, Sun iPlanet servers, Windows 2000, HDS storage servers and Veritas storage management. It has 35 direct customers, including divisions of Tower Insurance, TVNZ, UnitedNetworks, Fintel and Unisys.