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The business calculus is a bit strange here. WD and Hitachi are in the part of the storage market that has to be pretty close to it's peak. The HDD business see

The business calculus is a bit strange here. WD and Hitachi are in the part of the storage market that has to be pretty close to it's peak. The HDD business seems to have grown in 2010 http://www.eetimes.com/electronics-news/4213390/Western-Digital-grabs-disk-drive-lead http://www.eetimes.com/electronics-news/4213390/Western-Digi... but it's pretty doubtful that the trend will continue, and it seems like there's a pretty sharp cliff coming. That in mind, why pay $4.3B for a company that only has 2-5 years left in a dying, $0.6B industry that has low profit margins?

ojbyrne 16y ago
It's a little difficult to interpret, but that's 0.6 billion units shipped, not $0.6 billion.
jonknee 16y ago
You're severely underplaying the HD storage market's revenue. Western Digital alone had nearly $10 billion in revenue last year. Also, Hitachi GST is a partner of Intel's for SSDs... Seems like a good acquisition for WD.
siromega 16y ago
The price might be high, but I figure this (consolidation of market participants) is normal in a market that is peaking or on the decline.
sitkack 16y ago
Now that top tier drive maker has acquired the 2nd or 3rd tier maker expect storage prices to go up. Seagate isn't the competition it used to be.
rosser 16y ago
This isn't just about hard drives. Hitachi Storage also makes some pretty huge -- and well-regarded -- SANs, and enterprise storage is one area into which I've never really seen WD make much headway. This acquisition would make them a full-spectrum player in the storage market. Enterprise storage is also an area with rather higher profit margins than merely hawking spinning rust.
- wmf 16y ago
  But HGST != HDS.
bane 16y ago
The acquisition may make sense in light of a saturated market. They effectively kill off a competitor and can move in on their customers.
kirpekar 16y ago
From WD's press release: Calendar 2010 was a year of tremendous opportunity for the hard drive industry with 651 million drives shipped. That's 330 million terabytes of storage capacity sold into a broadening set of applications and markets. At 16%, this was the industry's strongest full year unit growth in five years. Rotating magnetic storage remains the dominant technology solution for high-volume mass storage of digital content in both the consumer and commercial markets. Full year revenue for the industry expanded by some 13% to $34 billion.

ojbyrne 16y ago

It's a little difficult to interpret, but that's 0.6 billion units shipped, not $0.6 billion.

jonknee 16y ago

You're severely underplaying the HD storage market's revenue. Western Digital alone had nearly $10 billion in revenue last year. Also, Hitachi GST is a partner of Intel's for SSDs... Seems like a good acquisition for WD.

siromega 16y ago

The price might be high, but I figure this (consolidation of market participants) is normal in a market that is peaking or on the decline.

sitkack 16y ago

Now that top tier drive maker has acquired the 2nd or 3rd tier maker expect storage prices to go up. Seagate isn't the competition it used to be.

rosser 16y ago

This isn't just about hard drives. Hitachi Storage also makes some pretty huge -- and well-regarded -- SANs, and enterprise storage is one area into which I've never really seen WD make much headway. This acquisition would make them a full-spectrum player in the storage market. Enterprise storage is also an area with rather higher profit margins than merely hawking spinning rust.

wmf 16y ago
But HGST != HDS.

bane 16y ago

The acquisition may make sense in light of a saturated market. They effectively kill off a competitor and can move in on their customers.

kirpekar 16y ago

From WD's press release: Calendar 2010 was a year of tremendous opportunity for the hard drive industry with 651 million drives shipped. That's 330 million terabytes of storage capacity sold into a broadening set of applications and markets. At 16%, this was the industry's strongest full year unit growth in five years. Rotating magnetic storage remains the dominant technology solution for high-volume mass storage of digital content in both the consumer and commercial markets. Full year revenue for the industry expanded by some 13% to $34 billion.