Seagate Seals Up Acquisition of Samsung's HDD Unit

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News Posted: Tue, Dec 20 2011 12:49 AM
And just like that, it's a done deal. Seagate has just concluded the acquisition of Samsung's hard disk drive business, only days before the new year. The agreement includes extensive supply and cross-licensing arrangements, which are said to now be "fully operational."

Under the terms of the transaction, Seagate has gained select elements of Samsung’s HDD business, including assets, infrastructure and employees that enable Seagate to drive scale and innovation. These assets include Samsung’s leading M8 product line of high-capacity, 2.5-inch HDDs. Samsung employees joining Seagate include a number of senior managers and design-engineering employees from Samsung's Korea facility, who will focus on development of small form-factor products for the mobile compute market. N.Y. Park, senior vice president and general manager, will oversee Seagate’s product development activities in Korea and serve as country manager of the Korea design center, reporting to Bob Whitmore, Seagate’s executive vice president and CTO.

“Together, Seagate and Samsung have aligned our current and future product development efforts and roadmaps in order to accelerate time-to-market efficiency for new products and position us to better address the increasing demands for storage,” said Steve Luczo, Seagate chairman, president and CEO. “It is an exciting time in the industry with rapidly evolving opportunities in many markets including mobile computing, cloud computing, and solid state storage.”


This transaction was announced in April 2011 along with a series of other agreements between Seagate and Samsung. Seagate is supplying disk drives to Samsung for PCs, notebooks and consumer electronics devices. Samsung is supplying its market-leading semiconductor products for use in Seagate’s enterprise solid state drives (SSDs), solid-state hybrid drives and other products. The companies have also extended and enhanced their existing patent cross-license agreement and have expanded cooperation to co-develop enterprise storage solutions. The transactions and agreements substantially expand Seagate’s customer access in China, Southeast Asia, Brazil, Germany and the Russian Federation. Seagate and Samsung also have been working together to ensure that customers continue to receive a high level of service, support and innovation, including activities to align the two companies’ supply bases and delivery infrastructure. To ease the transition of products and technologies, Seagate will retain certain Samsung HDD products under the Samsung brand name for 12 months, and maintain or establish a number of independent operations including sales staff, key production lines and R&D.

The combined value of these transactions and agreements is approximately US $1.4 billion, consisting of 45,239,490 Seagate Ordinary Shares and the remaining balance settled in cash. In addition, Samsung will designate a nominee to join Seagate’s Board of Directors.

Seagate does not presently expect significant restructuring costs and expects to achieve considerable reductions in overall operating expenses for the combined business while minimizing the integration costs. As previously stated, Seagate expects that the transactions and agreements will be meaningfully accretive to non-GAAP diluted earnings per share and cash flow in the first full year following the closing. Seagate will provide additional financial information for the combined company on its fiscal second quarter conference call in late January.

What does this all mean for the consumer? Probably not a whole lot, but perhaps we could see more innovation now that two heads are working together. Here's hoping we don't see higher prices thanks to less competition, though.
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DDeveaux replied on Tue, Dec 20 2011 9:00 AM

Great....one less quality hard drive manufacturer. I won't buy another Seagate drive after the recent failures of 4 Seagate drives (including the horrible 7200.11 series). Pretty much we're just going to see Western Digital & Seagate hard drives in the market, and that's a bad thing IMO.

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rrplay replied on Tue, Dec 20 2011 9:30 AM

What I am more concerned about is the recent changes to both Western Digital as well as Seagate with reducing the warranty on the product lines.

http://www.theregister.co.uk/2011/12/16/seagate_cutting_warranties/

.."Effective December 31, 2011, Seagate will be changing its warranty policy from a 5 year to a 3 year warranty period for Nearline drives, 5 years to 1 year for certain Desktop and Notebook Bare Drives, 5 years to 3 years on Barracuda XT and Momentus XT, and from as much as 5 years to 2 years on Consumer Electronics.

The details of the new warranty periods are:-

  • Constellation 2 and ES.2 drives: 3 years
  • Barracuda and Barracuda Green 3.5-inch drives: 1 year
  • Barracuda XT: 3 years
  • Momentus 2.5-inch (5400 and 7200rpm): 1 year
  • Momentus XT: 3 years
  • SV35 Series - Video Surveillance: 2 years
  • Pipeline HD Mini, Pipeline HD: 2 years

Mission-critical and retail products are not affected by this change. The new warranty periods will apply to shipments from 31 December...."

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omegadraco replied on Tue, Dec 20 2011 11:05 AM

And then their were two major manufacturers. Seagate/Samsung and WD/Hitachi... I am sure the chopping block will be coming shortly for Samsung and Hitachi drives as well. SSDs FTW too bad the average person can't afford the high capacity ones.

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Samsung's quality will take a dip I thiknk

I see this as an opportunity for the likes of OCZ. If they can get their SSDs like the Agility and the older Vertex Series (Vertex 2) to lower prices they may snag some share from consumers who don't want to pay SSD prices for a HDD. Capacity will still be an issue though, as you said Omega.

Sure the drives I mentioned are not the fastest high-end SSDs but they're plenty faster than any HDD. I'm going to be springing for a few SSDs soon.

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I have Seagate hard drive in my old PC and new PC. They still hold on and I dont have no problem with it. Unless if Seagate HDD in my PC failure and I can replace it. Who know? I hope the HDD can hold on for long time.

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AKwyn replied on Tue, Dec 20 2011 4:03 PM

Call me surprised but I think it's great that two companies are going to be working together rather then this being the usual corporate acquisition; I mean Samsung has the technology and Seagate has a lot of muscle, combine those two and you can have really great things coming out from them.

Honestly, I seem to be the only person who doesn't see Seagate drives as PoS', I mean I have a Seagate drive, been working fine for 6 years and counting... I just don't see the fuss when it comes to the issues people are complaining about.

Also I see some people thinking that this'll in turn help the adaptation of SSD's; I tend to digress mainly because of the fact that SSD's are not reliable enough to replace an HDD. I mean sure, an HDD is slow but it's the most reliable drive out there; SSD's can have the same type of reliability but only if you go SLC and that's going to cost a pretty penny. I know there are methods such as TRIM and wear leveling being put to use but I still think it's not doing much to match the reliability of HDD's, especially since SSD manufacturers are considering moving their drives to TLC in order to lower the prices further, which in this case means more methods for reliability but that's only masking the true problem.

The only way to even use an MLC SSD is by pairing it with a HDD; that way you can get the speed, the storage and just in case your SSD breaks down on you, you don't lose any important information since all of the information you wanted is on the HDD. I mean just imagine if you had the SSD as the sole drive and it broke down on you, you can't recover any information since the flash chips are basically dead from all of that writing (flash chips have a set number of writes before they fail completely.) SSD's are going to have to match the reliability of HDD's if they're going to replace them entirely, and not just the SSD + HDD setups.

 

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DDeveaux replied on Tue, Dec 20 2011 8:28 PM

Seagate's older drives were good - hence why your 6-year old drive is still spinning along just fine.  It's the newer drives that are causing more problems.

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OSunday replied on Tue, Dec 20 2011 9:38 PM

Seagate and Western Digital are the leaders in the Hard Drive market for a reason, they produce some of the best products out there, even if occasionally a hard drive out of the hundreds of thousands does fail, the chance of malfunctions low

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AKnudson replied on Tue, Dec 20 2011 9:58 PM

Wow this happened really quick, i haven't heard any news it or anything, thats a really good point i hope they don't raise their prices, that would suck but i do think they will start cranking out some high quality hardware.

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AKnudson replied on Tue, Dec 20 2011 10:00 PM

I have thought about it for a while and i have actually heard news about samsung, a lot of it actually. they look like they are positioning for something huge. then again this may have been it. i expect great things out of samsung, i am also looking for them to enter the computer world much more hardily with the backing of such experience as seagate.

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realneil replied on Tue, Dec 20 2011 10:13 PM

TaylorKarras:
I seem to be the only person who doesn't see Seagate drives as PoS

They're getting a bad rap.

I have a bunch of older Seagate drives that all work just as they're supposed to. They did have a problem a year or so ago, (I had one go bad) but they replaced all of those drives and since then, I've had no problems at all with them.

I recently bought three SATA-III 1.5TB drives by Seagate (before the prices went so far north) and they're fine.

 

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