Western Digital and Hitachi are going to eat Seagate for breakfast

Could Seagate be doomed? With Western Digital purchasing Hitachi Global Storage, it’s a double threat the whole storage industry has to stand up and take notice of.

Western Digital, with Hitachi on board, will see it taking 49.6 percent share of global Hard Disk Drive unit shipments based on Q4 totals – compared to 29.4 percent for Seagate. That means Western Digital can sit comfortably with 20.2 percentage points over Seagate, whereas it’d only have a two point lead with no acquisition, according to IHS iSuppli figures.

IHS iSuppli analysts also reckon that with Hitachi, Western Digital will be able to enter the critical enterprise HDD market segment – where it is currently only on the fringes. Until now, it has focused on consumer hard drives for desktop, mobile PCs, set top boxes and games consoles. In the enterprise segment for Q4 2010, it had the smallest share of any company’s total shipments, under one percent. Seagate had managed 65 percent and Hitachi GST had managed 27 percent.

Western Digital creeping into enterprise will be good for profits. The market has sky-high margins by comparison and enjoys significantly fast and healthy growth. With Hitachi’s portfolio there’s no doubt, says IHS iSuppli, that it can compete, especially with Hitachi’s 3.5 inch and 2.5 inch HDD with SATA and SAS, common place within the enterprise.

That said, the reason Western Digital may have decided to buy Hitachi GST now is because of slowing sales in the HDD market. In the first quarter of 2011 HDD shipments are already dropping sequentially, down 3.9 percent from 167.5 million to a forecast of 160.9 million. Tablets could be eating the HDD market as they’re not required for the devices. Then there’s the growing use of cloud storage.

But Western Digital’s buy could make it the top dog in the HDD industry, where acquisitions are needed to bolster organic sales growth. 

TechEye contacted Seagate but it could not comment.

*EyeSee Again, the picture is traditional storage, where Hitachi, Western Digital and Seagate have all failed to capitalise.