Samsung Selling Hard Drive Unit? Seagate a buyer?

2
Posted April 18, 2011 by Patrick Kennedy in News

Today the Wall Street Journal reported that Samsung was mulling the sale of its hard drive unit. Seagate has been rumored as a potential buyer which makes a lot of sense. With the pending Western Digital – Hitachi tie-up  it makes sense. As ServeTheHome noted at the time of the Western Digital – Hitachi GST announcement:

“At the end of the day, after the move Samsung is likely to gain some desktop share from those companies that purchased Hitachi drives because they did not want to purchase Seagate or Western Digital. The deal will put WD in the clear #1 spot with Seagate as #2. It will be interesting to see if Seagate can find the financing to make a run at Samsung to close the desktop and notebook gap that is now between Seagate and Western Digital.”

Samsung’s interest in leaving the hard drive space is not surprising as Western Digital will be the clear #1 and Seagate will be a #2 several times larger than Samsung. In a business largely reliant upon economies of scale, the WDC-Hitachi GST merger may have been too much for Samsung to withstand.

One other strong possibility is that if Seagate balks at the estimated $1B to $1.5B it Samsung is reportedly looking for, is that a private equity firm will pick up the struggling asset for a relatively low price. Several PE firms were reportedly looking at Seagate only a few months ago so it is logical to assume those same suitors are looking at this asset. Samsung’s biggest issue is that there is going to be immense downward price pressure as without a sale the new WDC and Seagate will have the ability to push Samsung out of the market.

For hard drive consumers, it is likely that this will leave a duopoly in the market. With both Samsung and Hitachi drives currently receiving great reviews, there is a real possibility that the loss of a third major hard drive manufacturer will leave the market with the existing Western Digital and Seagate technology that the parent companies are familiar with and their supply chain is able to handle. This was the case with the Seagate-Maxtor merger and unlike that acquisition, purchasing a customer list for $1B to $1.5B is probably less risky with only one other major competitor.

Feel free to discuss this topic on the ServeTheHome.com Forums!


About the Author

Patrick Kennedy

Patrick has been running ServeTheHome since 2009 and covers a wide variety of home and small business IT topics. For his day job, Patrick is a management consultant focused in the technology industry and has worked with numerous large hardware and storage vendors in the Silicon Valley. The goal of STH is simply to help users find some information about basic server building blocks. If you have any helpful information please feel free to post on the forums.

2 Comments


  1.  
    zicoz

    Must say this is really disapointing. Now there are 2 major vendors left, WD, which I don’t want to use because of IBM “Death Star”, and Seagate which I don’t want to use because of the trouble they had a while back.

    Guess I’ll start buying a bunch of Samsung drives before they dissapear.




  2.  
    BSD guy

    The “Death Star”? That was 7+ years ago, an eternity in computer history. My experience with Hitachi drives is so far better than Samsung, of which I’ve had to RMA many a drive.

    Overall, this is definitely bad news though. The last thing we need is a duopoly of HDD vendors.





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