Just as the sports-crazed among us have recovered from Super Bowl
Sunday and are preparing for March Madness, Western Digital announced that it is buying Hitachi's Global Storage Technologies division, which will bring the hard
drive market to a final four vendors a full month before the NCAA tournament does.
The new Western Digital will be far and away the largest hard drive vendor,
selling 49 percent of the world's hard drives.
This consolidation is just the final indication that the small hard
drive that Clayton Christensen used as an example of disruptive technology in
his seminal book "The Innovator's Dilemma" has become a mature industry where
manufacturing efficiency and scale matter more than innovative technology. While solid state storage has the potential
to replace spinning disk, it's coming to the market at the top end. Disruptive technology, in contrast, usually comes from the low end to eat into existing tech's
market over time.
Back in the '80s, my then-partner Terry Kennedy and I decided to
leverage the experience we (OK, mostly Terry) had gained writing BIOS drivers
for CP/M machines and started selling hard disk subsystems for PCs and other
computers. We had a parade of drive
salesmen in the office trying to get us to buy drives from startups like
Rodime, Evotek, Maxtor and Conner Peripherals. A new market meant that there were
plenty of competitors, but also that we could end up buying a truckload of drives
from Evotek only to discover that the revolutionary plated media would corrode
about four months after the drives were installed. As with today's array vendors, we
stuck to major suppliers like CDC after that fiasco.
After the $4.3 billion dollar deal closes, the total disk market will
consist of Western Digital; Seagate, which was the No. 1 vendor in 2010 on a dollar
basis but trailed WD with a 29 percent share by units; Toshiba, which bought Fujitsu's drive
business last year; and Samsung. Of the three, Samsung has the narrowest product
line with desktop, laptop and microdrives, but nothing that spins over 7,200 RPM. Hitachi bought GST from IBM in 2002
for $2 billion, so it will see a small
profit on the sale to Western Digital.
Like Samsung, Western Digital had been specializing in capacity-oriented
drives for the past few years, with its 10K RPM Raptor and VelociRaptor drives
selling mostly to enthusiasts (though EqualLogic did use 73GByte Raptors in one
early model system). WD SAS drives haven't
caught on with the EMCs and NetApps, or even the Dot Hills and Nexsans, of the
world, as it didn't have a 15K RPM model and array vendors would rather
qualify one vendor's drives for the 10K and 15K RPM niches. Now, with Hitachi's
high-end drives, its product line is complete. In fact, as usually happens
after one of these mergers, the company will have to prune the line as 15 1TByte models is a
few too many.
Western Digital's management will run the combined company, and Hitachi
will gain a few seats on the board.