Seagate Informs World+Dog That SSDs Aren't Worth The Effort

Seagate issued a general announcement yesterday in an apparent attempt to clarify its SSD plans going forward. Of all the various hard drive vendors, Seagate has been by far the most acrimonious towards SSD development; former CEO Bill Watkins' plans for dealing with the introduction of SSDs was to threaten to sue the companies out of existence. Watkins is gone, but Seagate has barely dipped a toe into the SSD market.

Seagate's latest official press release statement attempts to justify the company's decision to mostly ignore SSDs in favor of conventional hard drives or hybrid drives.
...the yawning gulf between NAND flash memory production capacity for solid state drives and demand for laptop storage will continue to widen. Whatever portion of megafab production capacity is devoted to NAND flash SSDs, the return on investment would be difficult to justify given the relatively small available market for laptop SSDs.
Translated into plain English, Seagate is saying that any attempt to build a NAND flash fabrication plant would cost far more than the plant's yearly revenue could justify. The company provides various cost/benefit analyses to prove this fact, discusses the current distribution of Flash (the overwhelming majority is used for cell phones, cameras, and other devices) and finishes by stating: "Seagate believes there is ample flash to support the opportunities Seagate sees for enterprise and hybrid solid state storage."

Didn't Western Digital Just Say The Same Thing?

It's only been a few days since we covered Western Digital's own comments regarding the company's position on SSD technology. The general statements of the two companies are much the same; neither see SSDs becoming big enough to warrant massive fab investments at this time. Given the substantial build-out cost and manufacturing difficulties of launching into the SSD business, both positions make logical sense.

What's strikingly different is the tone the two companies' take. Western Digital's CEO gives the impression of a company that's carefully monitoring a new technology, has invested in its own branded product, and is watching to see what happens next. Seagate, in contrast, comes off as attempting to justify its decisions behind a lot of market predictions and number crunching. While both companies have SSD products, Seagate has spent very little time talking up or about its non-rotational enterprise storage solutions.


Seagate's Pulsar-series SSD, seen here without a cover. We assume the whizzy purple thing is extra.

The final oddity here is profit margins. Hard drives are a bargain-basement business; SSDs offer considerably stronger margins. Western Digital, while clearly not leaping into solid state, has at least established itself as a player in desktop and mobile markets, thus allowing it to share a portion of the pie. From that perspective, Seagate's arguments over fab costs are a straw man—buying Flash RAM from someone else surely cuts into SSD profit margins but WD likely still earns a higher revenue percentage per SSD as compared to HDD.

Seagate's decision to stay out of most SSD markets won't impact the company's bottom line in the short term, but its continued near-total dismissal of solid state drives is a curious thing. It's one thing to remark that your company will continue to focus on its core business and something else entirely to dismiss a fledgling market where you might one day find yourself competing with memory manufacturers who built their own brand presences while your company was studiously ignoring market trends. 
Via:  HotHardware

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