SCOTTS VALLEY, Calif. (
said Tuesday it was closing its Singapore plant and laying off 2,000 workers, despite better-than-expected fiscal
and signs that the overall storage market is improving.
The hard disk-drive market is tough, to say the least. In 1985 there were 60 hard disk-drive manufacturers in the world. Through industrywide consolidation, that number has dwindled to a handful, primarily because of shrinking profits and technology challenges. The latest move in 2009 was when
announced it would purchase
Technology advancements of HDDs have been a mixed blessing for the manufacturers in an effort to maintain market share. In the past year, the average capacity of a 3.5-inch ATA drive increased by 45%, resulting in bloated research and development expenses and shrinking operating margins.
In a competitive environment, market share is sometimes also a matter of luck. For example, if your customer is
, and Dell underperforms the market because of its own issues, which may have had nothing to do with you, then you would lose market share because Dell lost market share.
In the case of Seagate, luck turned against it this year because of its mix of HDD products, whereas 2009 is turning positive for
Seagate has historically maintained a lead in the desktop and the enterprise markets, while Western Digital has focused on non-desktop applications, primarily the 2.5-inch form factor for mobile and consumer electronics. This year both the desktop and enterprise markets are dropping, which is bad luck for Seagate, while the mobile market is rocking and consumer electronics is somewhat positive, good news for Western Digital.
But shortsightedness is also hurting Seagate this year because the mobile market has been growing at a greater rate than desktops and Western Digital's response was better.
As I said previously, Toshiba purchased Fujitsu's HDD operations earlier this year. Fujitsu, at the end of 2008, had a 16% share of the 2.5-inch HDD form factor, which incidentally goes into mobile computers. That's comparable to Seagate's 16.2% share, Western Digital's 23.2% share and Toshiba's 16.4% share.
Now, it looks to us as if Western Digital will move into first place in the overall HDD business for calendar-year 2009 on a unit basis, usurping Seagate's dominance. If Seagate had bought Fujitsu, 2009 would be a moot point.
While the overall HDD market grew 17% sequentially in the second quarter, Seagate grew only 7%, while Western Digital grew 27%.
For 2009, we forecast the total HDD market to reach 600 million units, up 9% from 2008.
-- Written by Robert Castellano in New Tripoli, Pa.
Robert N. Castellano, Ph.D, is President of The Information Network, a leading consulting and market-research firm for the semiconductor, LCD, HDD and solar industries. Castellano is internationally recognized as one of the leading experts in these areas. He has nearly 25 years of expertise as an industry analyst. Castellano has provided insight on emerging technologies to many business and technical publications, including Business 2.0, BusinessWeek, The Economist, Forbes, Investor's Business Daily, Los Angeles Times Magazine, The New York Times, USA Today and The Wall Street Journal. He is a frequent speaker at conferences and corporate events. He has over 10 years' experience in the field of wafer fabrication at AT&T Bell Laboratories and Stanford University before founding The Information Network in 1985. He has been editor of the peer-reviewed Journal of Active and Passive Electronic Devices since 1985. He is author of the book "Technology Trends in VLSI Manufacturing," published by Gordon and Breach. His book "Solar Cell Processing" was published in 2009 by Old City Publishing. He received his Ph.D. in solid state chemistry from Oxford University.