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A new look at where the hard drive industry is heading

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September 19, 2014

We haven't done this in a while and there's certainly been a lot of changes in the past 1 1/2 year, so let's see where the hard drive manufacturing industry is heading these days.

To be sure, there's been a lot of acquisitions and mergers, but there's more to that than what we can read in financial media.

These days, drive manufacturers are saying they are not competing with their mainstream storage array makers, such as EMC, Fujitsu, HDS, HP, IBM, Dell and NetApp, nor their other storage array and enclosure-building customers like DotHill, Imation, Huawei, Synology and the other Taiwanese companies.

To which we say, donít bank on that promise. On any given day, hard drive makers are in intense competition with each other and are building commodity items in the millions of units with every point of profit margin fought over very agressively.

And yet they see their drives sold at cost $x to manufacturers who then sell them inside storage array enclosures with software selling two to three times more to their end customers.

Placing drives in enclosures is relative easy, anybody can do that. Itís the software thatís the issue. Acquiring Xyratex and its Lustre array management code, solved that problem for Seagate.

Working with Amplidata got HGST access to some object storage software. NAS code is a commodity and buying LaCie gets Seagate access to that as well.

So disks matters, while their online and in-store drive channels can take on domestic and SMB NAS with relative ease, and their profit margins they generate are very good.

With their confidence planted firm on the ground, they looked further up the stack and into markets overlooked by the major array makers.

To be sure, HPC storage, with DDN, Panasas and Cray fighting for it, was one such arena, into which Seagate sprang with its Xyratex acquisition.

Object storage was another, only HGST has conceivably upset more manufacturers here than Seagate with its Xyratex acquisition-Ė in fact, consider NetApp's E-Series solutions.

After all, EMC has Atmos and Centera, and both HDS and Hewlett Packard have their object storage product lines.

If Seagateís ClusterStor is good at big data, then itís an easy extension to move into adjacent enterprise markets.

If HGSTís Active Appliance is good at online cold storage then, fill it full of fast 2.5-inch disks, SSDs, PCIe flash, and turn it into a fast file array.

For now, HGST is working with Avere and is accelerating its products quickly. Itís just bits being loaded onto platters.

HGST, Western Digital and Seagate have just forced the thin end of potentially great wedges under mainstream storage array suppliers.

Those companies talk nice words of working with partners and all that, but be under no illusion-- they want the bulk of the dollars going to themselves.

So the question is, what can the storage providers do? Look at the following numbers:

  • Seagate market capitalisation: $19.33 billion.
  • WD capitalisation: $23 billion.
  • EMC capitalisation: $60.6 billion.
  • NetApp capitalisation: $13.85 billion.
  • HP capitalisation: $68.85 billion.
  • Disk drive suppliers today say the storage market is disaggregating. The server and storage people are seeing a converging market, one with unified storage, silo-reduction, and converged server-storage-networking systems.

    So some are thinking that now is the time to start aggregating and buy into Seagate and WD.

    Source: ITN 2014.

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