What’s Going Tomorrow for WD?

Cautious roadmap
By Jean Jacques Maleval on 2013.06.11

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By Corentin Béchade, redactor,
(Report from Istanbul, Turkey)

During WD Executive Summit in Istanbul, Turkey, Western Digital unveiled
its lastest enhancements in HDD and its plans for the
future of the company on June 4 at the Meridien Hotel, located around
9km of Taksim Square where protests about the government were taking

The Ultra-Slim WD is an HDD only 5mm thick for 500GB. Following this product, the big announcement
during the summit was the new 7mm model at 1TB. These two disks are
major devices for the company and they embody some of the new focuses
and diversification of the firm's portfolio.

While these drives are aimed for the 'thin and light' market, the focus
on mobility is not the only area where the company is developing.
Through several acquisitions, WD has developed a portfolio broader than
simple HDDs. The acquisition of Arkeia showed that the company is also
dedicated to software for backup and subsystems.

The Hitachi acquisition on the other hand could bring some valuable assets in R&D and hardware but the plans to make "one great company with two,"
according to Rich Rutledge, SVP and GM, datacenter storage, is still
held back by China's regulation body MOFCOM (for how long?), even though
the company claims that the merger creates a "pro-competitive situation"
and hopes to allow the firm to stop running HGST as it is now, an
independent unit. Already WD with HGST is
higher than Seagate in revenue, profitability and cash if you look at
their most recent fiscal quarter.

Storage trends such as the cloud or SSDs will generate new products and
tactics, estimates WD. For Rutledge it is impossible to predict exactly
what the future of storage will be like. "All of us have a risky future but WD is dedicated to storage and storage is still dominated by HDDs."

Concerning the rising trend of cloud storage, the company is confident
in its ability to provision cloud service providers with high capacity
HDDs to keep its mark on the storage industry and still maintain
consistent margin.

About SSDs, SanDisk is providing flash chips for WD. But Rutledge
believes that, "there is a growing market for both HDDs and SSDs," even
after the Thailand flood and a lower offering that led to
increased prices of disk drives. He emphasizes more on hybrid solution
like SSHD combining robustness, capacity and speed, and sees continuing
success of HDD in the future. Studies showed by WD proved that, by 2020,
75% of bits will be stored in HDDs (mostly in datacenter).

WD is now focusing on two products: 1/ Thin and fast SSHD, tiny HDDs for mobility and 2/ HDD for data centers.

To increase disk drive capacities, it plans to release it's first
Shingled Magnetic Recording (SMR) products in the first quarter of 2014.
Its labs are still working on helium HDDs -  separately from HGST -, a
product under testing for over three years, according to Bill Cain, WD's
VP technology.

Our Comments

Finally WD continues to be almost only a maker of HDDs, hybrid or not, also with a good market share in CE external hard disk drives, but remains a small player in SSD and NAS.

Furthermore, the integration of Arkeia's software into its subsystem line has to be done. It seems that the company does not want to see that the HDD market is reaching a limit, not only in term of units shipped but also in term of capacity where PMR is in its end of life in areal density. WD is not convinced by helium and does not see SMR before 1Q14.

Its cautious roadmap is not going to compensate the slow decline of its main activity.

On its side, Seagate is in the same situation but with:
  • deeper integration with acquired Samsung HDD business,
    more aggressive on SSDs, 
  • some investments in several innovative start-ups (Virident, DensBits, Cloudscaling, etc.) - WD also put some money in Skyera - , and
  • larger vision on subsystems and cloud storage with the acquisitions of LaCie and EVault, respectively.
WD needs a better global vision on storage. If the firm is unable inside to find new ideas, there are more than three hundreds storage start-ups ready to meet the HDD manufacturer to get just a small part of its cash, actually surpassing $4 billion.