Global hard drive giants Seagate and Western Digital marked 2011 with significant acquisitions that could change the competitive landscape for enterprise hard drives in 2012. The impact of these two mergers could be significant for the enterprise drive market, as the mergers will improve the enterprise hard drive and solid-state offerings of both Seagate and Western Digital.
Market Review: Enterprise Hard Drives
In 2010, Seagate led the enterprise hard drive market, which includes Fibre Channel and SAS drives, with approximately 63% market share. Hitachi Global Storage Technology (HGST) following with 24% of the enterprise hard drive market. Western Digital was not a major player in the SAS market, as they just started shipping SAS drives in 2010.
In the global hard disk drive market in 2011, Seagate and Western Digital appeared to be close competition. Seagate held on to 33% of the global hard drive market, while Western Digital followed closely with 29%. However, 2012 market share forecasts predict that Western Digital will take the lead with its newest acquisition.
Acquisitions, Changes Ahead
Currently, the market share of both Seagate and Western Digital are on the brink of a complete change. Just last month, Seagate completed its acquisition of Samsung’s line of enterprise hard drives.
The merger is predicted to significantly improve Seagate’s enterprise hard drives and solid-state technology. Seagate launched its first solid-state drive in March 2011, and hopes to improve this product through the acquisition. Western Digital, similarly, appears to be steps away from acquiring HGST.
Delayed by regulatory scrutiny, Western Digital will have to wait until March 2012 to close their $4.3 billion acquisition of Hitachi Global Storage Technology (HGST). The deal will give Western Digital more enterprise level products, including a line of enterprise solid-state drives.
Seagate-Samsung Close Deal
Closing their deal before the year-end, Seagate acquired rival hard drive producer Samsung’s M8 product line for $1.4 billion. The deal closed in December, after approximately seven months of regulatory negotiation that focused on marketplace competition.
With the merger, Seagate will acquire Samsung’s enterprise hard drive business in the form of its M8 product line. In addition to the line of 2.5” high-capacity hard drives, Seagate will also receive Samsung chips to create the next generation of enterprise solid-state drives.
Closure Awaits for Western Digital-HGST
Seeking a stronger market presence in the enterprise drives market, Western Digital first announced the acquisition of HGST in March 2011. Western Digital hopes to take advantage of HGST’s enterprise market share, as well as its partnership with Intel to create solid-state drives.
The acquisition has experienced vast amounts of interference due to anti-trust regulations. Regulatory groups feared that competition would be limited with only Seagate and Western Digital producing hard drives. However, the deal has recently received the approval of the European Union, Australia, and Japan, and Western Digital has announced that they plan to complete the acquisition by March of this year.
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