A new year means a fresh start, and a fresh start entails putting 2011's skyrocketing HDD prices behind us, right? Not quite. Seagate released its quarterly financial results yesterday, and although the report left investors cheering -- Seagate pocketed $3.2 billion in revenue despite last year's catastrophic floods -- things are looking a bit bleaker for end users. Seagate fully expects the hard drive shortage to continue until the end of 2012 as manufacturers struggle to catch up to consumer demand.
Seagate Technology, the world's largest maker of hard disk drives (HDDs), provided preliminary financial results for its fiscal second quarter ended December 30, 2011, a quarter which ended a week and a half after closing the acquisition of Samsung's HDD business. The results were better than anticipated and Wall Street investors took notice.
Seagate on Monday officially closed the deal to acquire the hard disk drive (HDD) business of Samsung for $1.4 billion, a transaction that was first announced in April 2011. Under terms of the agreement, Seagate gains select elements of Samsung's HDD division, including assets, infrastructure, and employees. Among the assets is Samsung's M8 product line of high-capacity, 2.5-inch HDDs.
Western Digital and Seagate are leaders in mechanical hard drives to be sure, but I think we can all agree this time they are leading the industry in a very negative direction. Back in 2008 Seagate lowered the standard HDD warranty from 5 years to 3, and as expected, just about everyone followed suit shortly after. Now they are dropping the coverage period on some products to as little as one year depending on the model.
It seems like every time we touch on the topic of hard drives lately, it's always bad news related to the recent flooding in Thailand. Ready for a change of pace? Good, because that's what you're getting today. Instead of news of more shortages and rising prices, we've now learned that hard drive volumes in the first quarter of 2012 will increase by several million units, decreasing the supply gap "significantly."
In the storage world, nothing matches a solid-state drive for speed, and nothing matches a mechanical hard drive for capacity and price per gigabyte. Recognizing these two great tastes would go great together, many vendors have attempted to find the perfect hybrid storage solution, with variable—and often clunky—results. Seagate’s Momentus XT, which we first reviewed in September 2010, offered a 500GB 2.5-inch drive with 4GB of NAND flash with an adaptive algorithm to ensure that the most frequently used files are mirrored in the NAND. This means your boot drive feels faster than a mechanical drive, if only for the stuff you use the most. We liked the first Momentus, but complained that it could use more NAND. Seagate aims to remedy that complaint with this new Momentus.
Seagate has started shipping the second generation of its Momentus XT, a solid state hybrid drive aimed at both consumer and commercial laptop applications, and the company's fastest driver ever for personal computers, Seagate says. Like the previous generation Momentus XT, this second gen drive moves frequently accessed data to a small chunk of solid state memory for faster access.
Hard drive maker Western Digital announced this morning that on November 18, 2011, an arbitration award of $525 million was rendered against the company by a sole arbitrator in a pending confidential arbitration action in Minnesota brought on by Seagate. Not included in that amount is prejudgement interest, which will be determined and tacked on at a later date.
We hate to be constantly beating the doomsday drum on the hard drive crisis in Thailand, but Seagate isn’t making any easier to give this a positive spin. According to Chief Executive Officer Stephen J. Luczo, Wall Street is talking nonsense if they think drive production will reach pre-flood as estimated in the summer of 2012. Instead Luczo estimates it will take a full 12 months to bring everything back online, and he expects it to be a difficult road ahead for the entire industry since more than 130 of its suppliers are still under three feet of water.
Now is not the time to buy a mechanical hard drive, not unless you absolutely have to. As you know, the recent flooding in Thailand hit the hard drive industry pretty hard (from a technology standpoint -- obviously the biggest tragedy here is the impact it had on people's lives), and even just a 1TB hard drive is going to set you back about $150 street, almost triple what they selling for prior to the flood. Is the shortage really that bad?