For a long time, hard disks have been the preferred storage for large amounts of data. Being relatively cheap and following the technological path of Moore’s law business has been good for the large hard disk companies. Eventually, the market ended up with 3 major players, Western Digital and Seagate with an equal market share in the low forties and Toshiba in the high teens. The two giants had followed an equal technological path and were in a stalemate situation. Until Western Digital decided to act on a market trend created by the cloud data centre. The cloud data centre is not only treating data as a cost but more importantly as a resource. When the focus shifts from storing data to investigating big data relationship, so do the need for storage. While the hard disk revenues declined during 2016, Flash revenue exploded. Western Digital could not have chosen a better time to acquire one of the top Flash players: SanDisk. Within a few quarters, flash grew to become half the revenue of Western Digital, while Seagate experienced negative growth.
With only a few flash companies left in the market, Seagate will have to hurry. Unfortunately, the only flash company up for sale is Toshiba. Being the third harddisk player, Seagate is not likely to receive regulatory approval of a deal due to anticompetitive legislation. The only option is to become part of a consortium bidding for Toshiba, which is what Seagate has chosen to do.
The Bain consortium including Apple, Hynix and Dell can possibly get an approval if they promise to protect Japanese jobs and manufacturing plants. This is likely the only chance for Seagate to get their fingers into the Flash pie and save the day. Should the consortium succeed, Seagate will use all options to increase its ownership share of the group to match the capabilities of Western Digital.
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