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Hard drive horse race between Western Digital, Seagate heats up

WD grabbed market share from its arch rival in Q1

June 4, 2010 06:02 AM ET

Computerworld - Western Digital Corp. in the first quarter of 2010 shipped the most hard disk drives (HDD) of any storage supplier, surpassing arch nemesis Seagate Technology for the first time ever on a quarterly basis, according to market research.

Western Digital shipped a record 51.1 million HDDs in the first quarter, according to iSuppli Corp. and IDC, representing a 3.2% increase from 49.5 million in the fourth quarter of 2009. Seagate shipped 50.3 million units in the first quarter of 2010, up 0.8% from 49.9 million drives shipped during the previous quarter, iSuppli said.

Because Seagate serves more of the enterprise-class data center market with higher end drives, it continued to lead all other hard drive manufacturers in revenue from hard drive shipments with $3.1 billion for the quarter, compared to Western Digital's $2.64 billion, said Fang Zhang, analyst for storage systems at iSuppli.

"In comparison, Western Digital employed a lower-cost business model that translated into reduced Average Selling Prices (ASP) and less revenue -- but higher unit shipments," Zhang said in a statement.

Market research published earlier this month from IDC, showed similar results, but its research director for hard disk drives, John Rydning, said the two companies are so close that it's hard to determine just who's ahead at this point. "They've been in this virtual tie for almost a year now," he said.

Over the long term, however, Western Digital has steadily gained ground against Seagate, Rydning said. For example, in 2005, Seagate claimed two-thirds of the combined revenue of the two companies.

"Today, from revenue perspective, it's about a 4% difference," Rydning said. "There's been a closing of gap over time."

Seagate did not immediately respond to a request for comment.

After Seagate, the top hard disk drive vendors in the first quarter were Hitachi Global Storage Technologies, Toshiba/Fujitsu and Samsung Electronics Co. Ltd. While the three companies maintained their sales rankings from the previous quarter, Hitachi's shipments saw the most growth -- 13.9% during the quarter -- while both Toshiba/Fujitsu and Samsung experienced declines in HDD shipments.

Western Digital surpassed Seagate in shipping two classes of drives: the 2.5-inch mobile drive and the 3.5-inch desk-top drive, according to Rydning. "The 3.5-inch desktop is probably the more significant one," he said.

Western Digital was able to pass Seagate for several reasons, not the least of which is that both companies now make more of their own components, allowing them greater economies of scale to cut manufacturing costs.

For example, Western Digital acquired HDD component manufacturers such as Read-Rite Corp. in 2003 and, more recently, Japan's HOYA Corp.'s magnetic media operations.



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