Hitachi Global Storage Technologies (HGST) will restructure manufacturing operations and launch a spate of new wares this year in an effort to turn profitable. And a prime target for sales will be the corporate enterprise. (See Hitachi Moves to Consolidate .)
In recent months, HGST has fallen behind main competitor Seagate in several key enterprise areas, including 2.5-inch SAS drives and 3.5-inch 15,000-rpm SAS drives with 300-Gbytes capacity. And while HGST beat Seagate to market with its 1-Tbyte drive, there's a chance Seagate could beat HGST to market with an enteprise version.
HGST, a division of Tokyo-based Hitachi Ltd., has failed to turn a profit since Hitachi and IBM closed the deal that formed the company in 2002. (See IBM, Hitachi Finish Merging Disk Units and Hitachi Buys IBM Disk Unit for $2B.) Despite reporting $4.9 billion in revenue from disk drives in calendar 2006, HGST logged a $375 million operating loss.
"Hitachi, enhanced by the creator of HDDs (IBM), has always been the student capable of an 'A', but perennially earning a 'D'. Only time will tell if the cross-cultural experiment in technology integration will ultimately work," write analysts Richard Kugele and Sean Hannan of Needham and Co. in a note today.
One problem is that HGST has fallen behind main competitor Seagate in the enterprise disk market, where it's all about smaller, denser, faster drives. Key trends include the SAS interface, 15,000-rpm SAS drives (especially for transactional performance), and capacity in 3.5-inch drives that doubles every 12 to 18 months. (See Seagate Intros Smaller Drives, Seagate Reports 2Q Results, and SAS Wave Breaks Big.)