History (1993): Strategic Partnership Between MiniStor “David” and Hitachi “Goliath”

Privately-held MiniStor Peripherals (San Jose, CA) and Hitachi Ltd. of Japan have entered a technology license and development cooperation agreements for the future production of new rugged disk drives for use in mobile computers.

MiniStor will provide the Japanese company with an unrestricted license of its proprietary 1.8-inch technology, including licensing of its Impact SAFE shock sensing technology.

In addition, the two partners will begin immediately the joint development of a new family of high capacity 2.5-inch drives that will be manufactured by Hitachi and marketed by both companies.

Financial terms of these agreements have not been released, however, no transfer of MiniStor equity is involved.

The joint product development agreement covers a three-year period.

“These agreements provide MiniStor with access to capabilities and resources of one of the largest companies in the world,” said MiniStor’s president and CEO James Miller.

“Hitachi will capitalize on this opportunity to strongly promote the 1.8 and 2.5-inch disk drive business throughout the world,” said Katsuhiko Kato, president of Hitachi’s storage and retrieval systems division in Odawara, Japan.

MiniStor is increasing its engineering staff by approximately 50% to develop the new family of IDE and SCSI 2.5-inch units.

To assist MiniStor’s development, a team of Hitachi engineers will immediately be based in San Jose, in the lab of the US company, focusing on electronics, servo writers and microcodes required for 2.5-inch HDDs.

At the same time, Hitachi engineers are developing new 2.5-inch mechanical and manufacturing technology.

MiniStor’s Singapore 1.8-inch production facility will continue to be responsible for pilot, pre-production and low volume requirements.

Volume production of the new disks drives is planned at Hitachi’s facility.

According to Toshihide Yoshida, president of TechnoAlliance, a company specializing in fostering U S/Japanese strategic partnership, “Rather than a stock deal or buyout, this partnership seeks to combine specific technical assets of each organization, leveraging their existing operations. Its goal is exact: to quickly develop and manufacture competitive disk drives that offer the mobile computer user tangible benefits.”

On its side, Hitachi only manufactured 3.5-inch and larger drives, and will now be able to complete its range of small form factor products with MiniStor’s technological help. On its side, the Californian company is finding the big industrial partner it was missing.

It’s also useful to note that Hitachi is strongly involved in M-R heads, and this could serve MiniStor in the future.

Agreements between US and Asians in disk drives have recently flourished: Aura Associates with NEC, Maxtor and Hyundai, Areal Technology acquired by the Japanese Tottori Sanyo and Tomen, Kalok and TEAC, etc.

MiniStor, founded in 1991, only manufactured 1.8-inch HDDs, mainly with the PCMCIA interface.

But to this day, the market for this type of product has not really bursted. MiniStor’s 1993 revenues are only approaching $15 million.

Last July, the firm announced that is had completed a third round of venture capital financing raising $14.7 million. Investors include Kleiner Perkins Caufield & Byers, Grace Horn Ventures, Institutional Venture Partners, Philadelphia Ventures, New York Life Insurance company and Berkeley International Capital Corporation. Total equity capital of $29 million consists entirely of equity investments.

This article is an abstract of news published on the former paper version of Computer Data Storage Newsletter on issue 68, published on September 1993.

Note: MiniStor was bankrupted in 1998.