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Western Digital to Own Half of HDD Market

IHS iSuppli offered its commentary on Western Digital’s purchase of Hitachi Global Storage Technologies (Hitachi GST).

For more information visit: www.isuppli.com


Unedited press release follows:

Western Digital to Become Dominant Hard Drive Maker with Hitachi Acquisition

With its purchase of Hitachi Global Storage Technologies (Hitachi GST), Western Digital Corp. (WDC) will pad its lead in the global HDD market, giving it nearly double the market share of No. 2 supplier Seagate Technology LLC. With the purchase, WDC will claim 49.6 percent share of global Hard Disk Drive (HDD) unit shipments based on fourth-quarter totals, compared to 29.4 percent for Seagate. This will give WDC a lead of 20.2 percentage points over Seagate, up from a mere 2 points without the acquisition. The attached figure presents the IHS iSuppli estimate of global HDD market share for unit shipments in the fourth quarter of 2010.

The Hitachi purchase will allow WDC to enter the critical enterprise HDD segment. WDC currently is only a marginal player in the enterprise HDD market, with nearly all of its sales going instead to the market for consumer drives, an area that includes products like desktop and mobile PCs, set-top boxes and video game consoles. Of all of the major HDD suppliers, Western Digital in the fourth quarter of 2010 had the smallest share of any company’s total shipments going to the enterprise segment, at less than 1 percent. In comparison, 65 percent of Seagate’s HDD shipments and 27 percent of Hitachi GST’s shipments went to the enterprise market.

“The enterprise HDD market garners significantly higher margins than the consumer segment, which makes the enterprise a fast-growing market for HDD revenue,” said Zhang. “To date, WDC has largely been absent from the enterprise segment. However, Hitachi GST brings WDC the essential technology, product portfolio and experience required to compete in the enterprise segment.” Hitachi GST offers both 3.5-inch and 2.5-inch HDDs with SATA and SAS interfaces, which are used extensively in the enterprise segment. The company has wide-ranging experience in this area, giving it the kind of track record required to win the confidence of enterprise customers, Zhang noted.

The WDC acquisition also may be a consequence of declining sales in the HDD market. HDD shipments in the first quarter of 2011 are anticipated to reach 160.9 million units, down 3.9 percent from 167.5 million in the fourth quarter of 2010. Shipments are being impacted by the rising sales of tablets, which don’t use HDDs and are cutting into the shipments of mobile PCs, a major market for hard drives. Other factors are affecting HDD sales as well, such as declining PC shipments in all major markets due to the growing use of cloud storage. Amid weaker industry conditions, organic sales growth is more difficult to achieve, prompting HDD suppliers to engage in acquisitions to gain market share.

Learn more about this topic with Zhang’s newest report entitled, Storage Market: Storage Manufacturers to Enjoy Holiday Boon.

About IHS iSuppli Products & Services
IHS iSuppli technology value chain research and advisory services range from electronic component research to device-specific application market forecasts, from teardown analysis to consumer electronics market trends and analysis and from display device and systems research to automotive telematics, navigation and safety systems research. More information is available at www.isuppli.com and by following on twitter.com/iSuppli.

About IHS (www.ihs.com)
IHS (NYSE: IHS) is a leading source of information and insight in pivotal areas that shape today’s business landscape: energy, economics, geopolitical risk, sustainability and supply chain management. Businesses and governments around the globe rely on the comprehensive content, expert independent analysis and flexible delivery methods of IHS to make high-impact decisions and develop strategies with speed and confidence. IHS has been in business since 1959 and became a publicly traded company on the New York Stock Exchange in 2005. Headquartered in Englewood, Colorado, USA, IHS employs more than 4,400 people in more than 30 countries around the world.

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