Seagate Buying Samsung HDD Just to Stop WD/Hitachi Deal?

Does Seagate decided to buy Samsung’s disk drive business principally to try to stop the former deal initiated by WD to acquire Hitachi GST?

In acquiring Samsung HDD, Seagate will only get market shares. In term of technology, there’s about nothing that Seagate does not have.

So, is there another reason behind Seagate’s acquisition? That’s a suggestion we got from the CEO of an integrator company being one the the biggest buyer of hard disk drives in the world: "There is a rumor that Luczo (Seagate’s CEO) did the operation on Samsung to prevent the WD/Hitachi deal", he told to StorageNewsletter.com. "Brussels is investigating on these two mergers. HP and Dell moan with the U.S. authorities concerning the competition," he added. "If Brussels and Washington agree for the (WD/Hitachi) deal, they will be obliged to agree also for Seagate," he concluded. "As Toshiba is not in good shape, we’ll have a duopoly on HDDs added to the monopoly on processors with Intel."

We tried to verify what’s going on EU but got nothing. For hugest HDD acquisition these last years, EU clears proposed takeover of Maxtor by Seagate in 2006.

In USA, the Federal Trade Commission already began to review the WD’s request concerning the pending acquisition of HGST imposed by the Hart-Scott-Rodino Antitrust Improvements Act of 1976. And apparently, it’s not going so well. Each WD and Hitachi have just received a second request for additional information.

Is there a risk of an understanding and then an artificial increase of prices with only three HDD makers remaining on the market? Between Seagate and WD, both companies being public, it will be an tremendous risk for them to try to collaborate on the subject. We remember that Mark Geenen, president of TrendFocus, a research company on the HDD industry, told us few years ago, at a time where he presided IDEMA (International Disk Drive Equipment and Materials Association), that he was at a meeting at the organization with the two CEOs each one escorted by their own lawyer.

But, of course, the are more risks for a not so fair HDD competition with only three companies – and two of them representing 90% of the worldwide market -, rather than five.

Let’s imagine in the future that Seagate decides to increase pricing for a more or less plausible reason (components shortage, etc). Looking at that, WD follows the trend for another a more or less plausible reason. No fraudulent arrangement or pact, no SEC investigation and more expansive drives for the integrator company and finally end users.