HARD drives have long been unsung workhorses of the digital world — best when they’re quiet, fast and flawless. Competition among their suppliers, meantime, has been fierce.
Seagate Technology’s pending US$1.9 billion acquisition of rival Maxtor Corp, announced on Wednesday, will likely make the industry even more cutthroat.
Scotts Valley-based Seagate, the world’s largest disk-drive maker, hopes the move will strengthen its position in an arena where the players are fighting not only each other but also with a competing storage medium — flash memory, the hidden but powerful element in portable gadgets like the iPod nano.
Bill Watkins, Seagate’s chief executive, called the acquisition “a leverage deal.”
“I’m buying $4 billion in revenue, and I’m going to leverage that in my manufacturing and engineering,” Watkins said in a phone interview. Watkins noted how Samsung, Toshiba, and Hitachi, which have other profitable business divisions, can aim to expand their market share while operating their hard-drive units at a loss.
It’s a dog-eat-dog world out there.
For once I don’t have criticism for the the blog intern or a message poster, but this article & headline doesn’t make much sense. How does consolidation make competition “more cutthroat”? Seems the other way around. There will now be one less competitor, one less producer desperately fighting for market share.
Seriously, the AP reporter doesn’t have to uncritically accept and dutifully pass along a CEO’s propaganda.
Are Samsung, Toshiba, and Hitachi really selling HDDs at a loss because they can make it up elsewhere? Would their Flash memory competitors maybe say they sell Flash at a loss and make it up on Hard Drives? Would their medical electronics (whatever) competitors maybe say they sell medical electronics (whatever) at a loss and make up for it on Flash and disk drives? I hear this stuff all the time when there is a narrow-focus company competing against a conglomerate.
I don’t know if embiggening Seagate will help it compete against Toshiba, but I bet Bill Watkins will soon be arguing to his board of directors that, of course, a CEO of a 12 billion dollar company should make more money than the CEO of a mere 8 billion dollar company.
Let’s see. The cable companies consolidated. The business got less cutthroat. The phone companies consolidated. The business got less cutthroat. The cellular companies consolidated. The business got less cutthroat. I detect a pattern.
The real question is “Will this slow down advances in hard drive technology?”
Dvorak has correctly pointed out that hard drive advances happen at a faster clip than any other technology. Maybe its time to update that theory.
I don’t disagree with the three posts above. I’m thinking that in the not too distant future, hard drives as we know them today will be replaced by a solid medium. No noise, no heat, less power consumption, faster access times, and more portability. It’s coming.
Magnetic media is dieing fast. Witness, 8-tracks, VCRs, and 5 ¼ floppies are either ancient history or on its way.