Seagate's stuck between a rock, a hard place, and a courtroom.

On one hand, the company faces strong competition from its peers. Western Digital now dominates the low-capacity, high-speed portion of the storage race and Samsung's still rocking the top of the high-performance, high-capacity charts with its speedy terabyte drive. On the other hand, you have the up-and-comers. Flash-memory manufacturers are looking to make a foothold with their high-performance products, one that's sure to increase as prices drop.

But if the volatile storage market has taught us anything, it's that the big companies and players are more like baseball teams than anything else: sometimes you win the Series, sometimes you don't make the playoffs, and sometimes you just get it handed to you for 162 games. Seagate's not at the bottom of the storage division by any means, but competitors are certainly starting to stake their claims in the marketplace. Seagate, notsomuch. At least, we haven't seen anything in their product line that makes us scream "industry-killer," save for the awesomely named D.A.V.E. device.

So what's Seagate been up to? Where are the new innovations that will make a storage menace out of this sleeping giant? And why is the company suing SSD manufacturers--perhaps a glimmer of Seagate's roadmap for the future? We recently sat down with Seagate's CEO, Bill Watkins, to get his take on these new developments (or lack thereof). And to figure out, for ourselves, how he plans to flex Seagate's storage muscle for the near-future.

Does the average person need a terabyte of storage? Where do you draw the line between high performance and high capacity?

I think the short answer is they need performance and they need storage. The thing about storage: No one really respects storage. They always respect microprocessors, they respect graphics, but nobody has any respect for storage. I’ll just give you a little anecdote–when Seagate was formed in 1980, one of the reasons a lot of people made a lot of money at Seagate was that there wasn’t a VC in the Valley willing to fund a storage company.

The first hard drive from Seagate was five megabytes–five megabytes of storage. A five-and-a-quarter-inch, big honkin’ drive doing five megabytes. No one–and there are some great letters we have–would invest in a drive company. The answer [we got] was that no one would ever need five megabytes of storage in their personal life. And that’s been the theme all along. As years have gone by, no one thought they’d need a gigabyte, no one thought they needed ten, or a hundred.

I used to tell [people] this story a long time ago: You have a hundred gigabytes in your home. And people would go “no way no way.” I’ll tell you right now, you have a terabyte of storage that you’re using in your home. You’ve got it in your mp3s, your iPods, you’ve got it on your TV set and your DVR, you’ve got it on your notebook, you’ve got it on your desktop, you’ve got it on your backup, you’ve got it on your GPS system – it’s all over. You don’t realize you have that much storage going on, you just don’t realize it. In a lot of ways, we’re kind of like the Wizard of Oz: We’re the man behind the curtain and no one recognizes how critical or how enabling this is. But this world, and going forward, it’s about content. It’s about electronic content distribution.

And the battle that’s really going on is not about microprocessors, speed, performance, or how much capacity. The battle going on is about people moving from physical distribution of content to electronic distribution of content. I don’t want a newspaper, I don’t want a CD, I don’t want a DVD, I don’t want a Blu-Ray disc. I want electronic media. I want to see my news on the internet. I want to move my music around and enjoy it, but I don’t want to have a CD. I just want to download it and do it.

But the battle going on, the war, it’s already over. It was never about Blu-Ray versus HD DVD, it was about physical distribution versus digital distribution. And what enables digital distribution of content is storage.

"In a lot of ways, we’re kind of like the Wizard of Oz: We’re the man behind the curtain and no one recognizes how critical or how enabling this is."

The simplest content to distribute is music. So you have an MP3 player in your hand. At the enterprise level, there’s a bunch of hard drives with all that music sitting there and it’s backed up. At your home, at your notebook or desktop, you’ve got to download it there, then you download it to your hand. Another big capacity is your desktop or your notebook – maybe you backed it up, maybe with an external drive. You may have an online account at Google or whatever. And then you finally get it to your hand. But the movement of that content creates five or six storage devices in order to enable the movement of that content – to hold it, to send it, and then to receive it. That’s our world. And no one respects it yet, but we’re going to get it out there.

So what’s more important to Seagate? Is it drive size or drive performance?

The most important thing to Seagate is enabling content distribution. The size is easy: I can give you performance, I can give you IOPS, I can give you speed, I can give you all of that. I can give you massive capacity, I don’t really care. What’s really more critical is that I want more and more content being digitized and I want that content moved digitally around the world.

So I want you to store it in the clouds, I want you to store it your hand, I want you to store it in your car, I want you to store it in your desktop, your notebook, I want you to back it up, I want you to send it to your grandmother. I want you to move content.

On the next page: Mobile storage and the search for the lost hybrid drive!