Seagate Works on Helium-Filled HDDs to Compete With HGST

In an Executive Brief, US analyst company Trendfocus, Inc. wrote on September 2, 2015:

Interesting Points from Seagate’s Analyst Day
 
Seagate held a widely anticipated analyst day event for Wall Street analysts to walk through the current market conditions as well as its outlook over the long term. While current HDD market conditions remain challenging for all companies given the weakness seen in PC demand, the company shed some light on both near and long term factors that should move the company forward.
 
First, on the near term outlook, Seagate executive management stated that the PC market conditions appear to be stabilizing with company CEO, Steve Luczo, claiming that OEM builds may have some uptick into next quarter. A recent Trendfocus trip to some major PC OEMs also pointed to build plans set to a conservative outlook in the current quarter. Without potentially overbuilding inventory, PC OEMs appear to be placing a cautiously sized number of systems on to ships to stock inventory for the holiday quarter and will respond to restocking requests in CQ4 by ramping up builds at that point and, presumably, air shipping the additional systems.
 
Seagate executives also continue to firmly believe that data generation will bode well for long-term storage demand growth in the enterprise space. Despite an unquantifiable cyclicality driven by uncertain demand cycles from the large hyperscale companies, the demand lumpiness should begin to smooth as the market matures with additional players growing in scale.
 
On the technology front, Seagate continues to show future technologies such as TDMR, HAMR, and bit-patterned media (BPM) as options to grow areal density and thus total HDD capacity over time. In regards to previous comments about HAMR-based HDDs emerging in the 2016-2018 timeframe, the company indicated that it is addressing issues associated with the tip of the optical path and that a HAMR product will emerge later in the projected timeframe. Other technology tidbits included mention of a sequential write/read performance high-capacity HDD to launch in the near future as well as lab work on helium-filled HDDs, which will would compete squarely against HGST’s models.
 
SMR will play a significant role in capacity enterprise for sequential write applications in the enterprise. On the client side, SMR has been shipping behind the scenes in external HDDs for a number of years already; however, Seagate’s announcement of a 1TB/disk, 2TB 7mm mobile HDD yesterday clearly points to the company moving SMR into a more visible role as a driver of areal density. And although Seagate commented that it viewed flash as a complementary technology, the company is well aware of the rapid decline in flash’s $/GB and the threat that presents. So, by being able to push areal density to 1TB/disk, Seagate is able to once again create a sizeable $/GB delta between HDD and SSD.
 
Seagate’s management did present solid and compelling arguments for the company and the health of the business. Their outlook remains positive, as the company is projecting a solid mid-single digit revenue growth for the next five years. With the proper execution and timely delivery of products and services, Seagate should meet their projections and may even surpass them.