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	Item 1. Business, page 2
	Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities, page 28
	Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 8. Financial Statements and Supplementary Data

[DOT HILL SYSTEMS CORP. LETTERHEAD]

January 7, 2008

Via FedEx and EDGAR

United States Securities and Exchange Commission
Division of Corporation Finance
100 F Street, N.E.
Mail Stop 4561
Washington, D.C. 20549
Attention: Mark Kronforst, Accounting Branch Chief


Re:		Dot Hill Systems Corp.
		Form 10-K for the Fiscal Year Ended December 31, 2006
		Filed March 16, 2007
		File No. 001-13317

Dear Mr. Kronforst:

We are writing in response to comments received from the staff of the Commission (the “Staff”) by letter dated December 19, 2007 (the “Comment Letter”) with respect to the Annual Report on Form 10-K for the fiscal year ended December 31, 2006 (the “2006 Form 10-K”) of Dot Hill Systems Corp. (the “Company”) filed with the Securities and Exchange Commission (the “Commission”) on March 16, 2007. The numbering of the paragraphs below corresponds to the numbering in the Comment Letter, the text of which we have incorporated into this response letter for convenience.

The Company acknowledges that it is responsible for the adequacy and accuracy of the disclosures in the 2006 Form 10-K, that Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission from taking any action with respect to the 2006 Form 10-K and that the Company may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

Staff Comments and Company Responses

Form 10-K for the Fiscal Year Ended December 31, 2006

Item 1. Business, page 2

You do not appear to have filed your agreement with MiTAC International Corporation and SYNNEX Corporation as an exhibit to your Form 10-K. Please advise whether you are substantially dependent upon this agreement for purposes of Item 601(b)(10)(ii)(B) of Regulation S-K.

United States Securities and Exchange
Commission
January 7, 2008
Page Two

The Company acknowledges the Staff’s comment and respectfully submits that the Manufacturing Agreement (the “Manufacturing Agreement”) by and among the Company, MiTAC International Corporation and SYNNEX Corporation is a material contract of the Company upon which it is substantially dependent. The Manufacturing Agreement was entered into on February 20, 2007, during the fiscal quarter ended March 31, 2007, and the Company filed an Item 1.01 Form 8-K with the Commission on February 22, 2007 disclosing the Company’s entry into the Manufacturing Agreement. In addition, in accordance with Item 601(a)(4) of Regulation S-K¹, the Company filed the Manufacturing Agreement with the Commission as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2007, the reporting period corresponding to the date the Manufacturing Agreement was executed.

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities, page 28

You do not appear to have provided the disclosure required by Item 201(e) of Regulation S-K. Please advise.

The Company acknowledges the Staff’s comment and respectfully submits that, in accordance with Instruction 7 to Item 201(e)², the disclosure required by Item 201(e) was provided in the Company’s annual report to its stockholders required by Securities Exchange Act of 1934, as amended (“Exchange Act”) Rule 14a-3 (the “Annual Report”) that accompanied the Company’s proxy statement relating to the Company’s 2007 annual meeting of stockholders. The Annual Report included the 2006 Form 10-K and a Form 10-K “wrap” that included information required to be included in the Annual Report but not otherwise included in the 2006 Form 10-K (the “Form 10-K Wrap”). The Form 10-K Wrap is enclosed with this letter as Exhibit A for the Staff’s reference.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Liquidity and Capital Resources, page 41

We note that your discussion of cash flows from operating activities is essentially a recitation of the reconciling items identified on the face of the statement of cash flows. This


¹		Item 601(a)(4) of Regulation S-K provides that if a material contract is executed or becomes effective during the reporting period reflected by a Form 10-Q or Form 10-K, it shall be filed as an exhibit to the Form 10-Q or Form 10-K filed for the corresponding period.

²		Instruction 7 to Item 201(e) of Regulation S-K provides that the information required by paragraph (e) of Item 201 need not be provided in any filings other than an annual report to security holders required by Exchange Act Rule 14a-3 (17 CFR 240.14a-3) or Exchange Act Rule 14c-3 (17 CFR 240.14c-3) that precedes or accompanies a registrant’s proxy or information statement relating to an annual meeting of security holders at which directors are to be elected (or special meeting or written consents in lieu of such meeting).

United States Securities and Exchange
Commission
January 7, 2008
Page Three

does not appear to contribute substantively to an understanding of your cash flows. Rather, it repeats items that are readily determinable from the financial statements. When preparing the discussion and analysis of operating cash flows, you should address material changes in the underlying drivers that affect these cash flows. These disclosures should also include a discussion of the underlying reasons for changes in working capital items that affect operating cash flows. In addition, we note that your 2006 operating cash flow appears to have been significantly affected by the cash paid to Crossroads; however, we note no disclosure within the operating cash flow discussion regarding these cash payments. Please tell us how you considered the guidance in Section IV.B.I of SEC Release 33-8350.

The Company acknowledges the Staff’s comment and respectfully submits that it will revise the Company’s Liquidity and Capital Resources disclosure as requested by the Staff in its future filings with the Commission to address material changes in the underlying drivers that affect the Company’s cash flows and include a discussion of the underlying reasons for changes in working capital items that affect operating cash flows.

With respect to Crossroads, the Company notes that it paid $3.35 million to Crossroads in 2006 as part of its settlement for alleged past damages and Crossroads agreed to dismiss, with prejudice, all patent claims against the Company. The payment to Crossroads was recorded as a charge to the statement of operations and a reduction of cash. While this payment was fully disclosed under Note 18 to the financial statements, “Commitment and Contingencies”, the Company will ensure that it adheres to the guidance in Section IV.B.I of Commission Release 33-8350 in future filings with the Commission and, as discussed above, disclose all material changes in the underlying drivers that affect the statement of cash flows in the Company’s Liquidity and Capital Resources disclosure.

Item 8. Financial Statements and Supplementary Data

Note 2. Acquisition, page F-12

We note that your reference to an independent third party appraisal that was used to value the Company’s intangible assets. Please note that when you refer to an independent valuation specialist you need to disclose the name of the expert and, if your annual report is incorporated by reference into a 1933 Act registration statement, include the expert’s consent. Refer to Rule 436(b) of Regulation C and amend your filing to include the consent, if necessary.

The Company acknowledges the Staff’s comment and respectfully submits that the Company’s reference to an independent third party appraisal will be removed from its future filings with the Commission and notes that the Company removed its reference to the use of independent valuation specialists in the Company’s Quarterly Report on Form

United States Securities and Exchange
Commission
January 7, 2008
Page Four

10-Q for the fiscal quarter ended September 30, 2007.

**********

The Company respectfully requests the Staff’s assistance in completing the review of the Company’s responses as soon as possible. Please advise us if we can provide any further information or assistance to facilitate your review. Please direct any further comments or questions regarding this response letter to me at (760) 431-4405.

Sincerely,

Dot Hill Systems Corp.

/s/ Hanif I. Jamal

Hanif I. Jamal
Chief Financial Officer

Enclosures


cc:		Christine Davis, Securities and Exchange Commission Senior Staff Accountant Mark Shannon, Securities and Exchange Commission Staff Accountant Jay Ingram, Securities and Exchange Commission Matthew Crispino, Securities and Exchange Commission Dana W. Kammersgard, Dot Hill Systems Corp. Thomas A. Coll, Cooley Godward Kronish LLP Charles J. Bair, Cooley Godward Kronish LLP