|From: Eric L||6/17/2016 9:48:05 AM|
|Looking Back: 'Market Realist' Contrasts Sandisk's & Western Digital's CQ1 earnings pre-Merger ... |
... in a very good 9 part series by Paige Tanner on May 4, 2016:
1. | SanDisk’s Fiscal 1Q16 Results: What a Surprise!
2. | Why SanDisk Returned to Growth after a Year of Revenue Declines
3. | Western Digital’s Fiscal 3Q16 Earnings Miss Analyst Estimates
4. | How Did SanDisk’s Product Mix Drive Revenue Growth?
5. | Why SanDisk’s Consumer Segments Drove Revenue Growth
6. | What’s the Role of Enterprise Solutions in SanDisk’s Future?
7. | How Strong Are SanDisk’s and Western Digital’s Balance Sheets?
8. | The Future of Western Digital after Merger with SanDisk
9. | Why SanDisk Stock Is Hovering Near the Top of Its 52-Week Range
With the merger completed Western Digital will conclude its Q4 2016 and FY 2016 fiscal year at the end of this month (June 30, 2016).
# # #
- Eric L. -
|RecommendKeepReplyMark as Last Read|
|From: Eric L||6/17/2016 4:57:44 PM|
|Looking Back: Tough 2016 for Western Digital and Seagate ... |
>> Why Have Seagate and Western Digital Had Such a Tough 2016?
May 4, 2016
Mizuho’s lowered target price for Seagate
The share prices of Seagate Technology (STX) and Western Digital (WDC) fell significantly when Seagate lowered its fiscal 3Q16 guidance. It happened again when Seagate announced its fiscal 3Q16 results on April 29. Seagate’s shares fell by 13% in the week ending January 22, 2016, after the investment company Mizuho cut its price target for the company from $38 to $32 and provided a “neutral” rating on the stock.
Meanwhile, SanDisk’s (SNDK) shares fell by 9.9%, whereas shares of Western Digital fell by 9.1% in the week ending January 22. Shares of WDC have fallen by over 45% in the past six months, after it agreed to buy SanDisk in yet another big deal in the semiconductor space on October 21, 2015. Shares of Seagate have also fallen by over 35% since the merger announcement.
The global HDD market
Western Digital and Seagate account for 80% of the global HDD (hard disk drive) market. In the past few years, the HDD market has shrunk, whereas the SSD (solid state drive) market has expanded.
Western Digital has also acquired Hitachi’s hard drive business. Hitachi is a major player in Japan’s (EWJ) technology sector, and now Western Digital is projected to account for 14% of the SSD market after its proposed merger with SanDisk, which would make it the second-largest player in this space after Samsung Electronics (SSNLF).
Falling prices of storage products
As you can see in the above table, SSD and HDD prices have been falling, and they’re expected to continue to fall in coming years. These falling prices have increased the adoption of SSDs in laptops.
DRAMeXchange Senior Manager Alan Chen expects the SSD adoption rate in new consumer laptops to rise from an estimated 26% in 2015 to 42% in 2017. ###
The article posted above is part 4 of a 5 part article and the full article can be read at the link below:
>> What Seagate's Fiscal 3Q16 Earnings Mean for All of Us
May 4, 201g
1.| Look What Just Sent Seagate’s Stock Spiraling Downward
2.| How Lower HDD Shipments Affected Seagate Revenues
3.| Why Is a Decrease in Operating Costs so Important to Seagate?
4.| Why Have Seagate and Western Digital Had Such a Tough 2016?
5.| The Word on the Street: What Analysts Are Saying about Seagate Technology
# # #
- Eric L. -
|RecommendKeepReplyMark as Last Read|
|From: Eric L||7/1/2016 10:11:38 AM|
|This Board: Looking Back before Moving Forward ... |
A few months back I poked my head in here to reacquaint myself with the almost 60 year old Storage Technology Device Industry and catch up with what has transpired in recent yeas as the industry increasingly transitions from Hard Disk Drives (HDDs) to Solid State Drives (SSDs). What I found was that while this board was quite active in the late nineties, only 6 posts had been made here in the last 5 years.
The popular SI Sandisk board now hosted by clean86 became the 'WDC/Sandisk Corporation' board in October 2015 after WD's Irvine, CA based wholly-owned subsidiary Western Digital Technologies completed the acquisition of SanDisk Corporation and began the integration process. In May of this year Sam created the 'WDC, NAND, NVM, enterprise storage systems, etc.' board where discussion has focused on WDC as an investment and/or trading opportunity.
This board is intended to complement the other 2 currently active Western Digital boards not compete with them and my own personal initial focus will be on:
• Historical: The HDD Industry History
• M&A: The Mergers and Acquisitions that have reduced the major HDD industry players to 3
• WD History: Including Intel/Hitachi background, Hitachi GST, HWD GST, And WD/Sandisk
• Integration: Completing the integration of HGST, Sandisk, and other acquired entities
• WD Products
WD concluded it's 2016 fiscal year yesterday and I'm looking forward to The FY Earnings Report, the CC and subsequent publication of the 10K and Annual Report. Beyond that I'll post occasionally and others are invited to do the same. Perhaps someone else will poke their head in and contribute. It's premature to turn out the lights here. The original board header was created in 1996 and I've updated it. I've also made 4 posts prior to this related to the Sandisk acquisition.
- Eric L. -
|RecommendKeepReplyMark as Last Read|
|From: Eric L||7/5/2016 10:19:25 AM|
|Toshiba/Western Digital Flash Memory Production Increased Investment |
>> Report : Toshiba, Western Digital Commit 1.5 Tln Yen On Flash Memory Production
July 04, 2016
Toshiba (TOSYY.PK, TOSBF.PK) and U.S. partner Western Digital will commit 1.5 trillion yen or $14.6 billion over three years toward stepping up flash memory production at their jointly run Japanese plant, in a bid to widen global market share, Nikkei reported.
Western Digital inherited the operational tie-up at the Yokkaichi plant in Mie Prefecture when the hard-disk producer took over American rival SanDisk in May. The site in central Japan will receive a new fabrication facility, with new equipment to be installed in the existing production space. This round of capital spending over three years is about 30% more than previous comparable periods.
The plan is to boost 3-D memory production, with such chips accounting for 50% of the segment in fiscal 2017 and exceeding 80% in fiscal 2018.
The report noted that Western Digital will match Toshiba's expenditures in the segment over that three-year period. The two companies will likely spend approximately 1.5 trillion yen on the Yokkaichi plant, of which Toshiba possesses the land and the buildings. The time frame for the spending will be adjusted in tune with market conditions.
The sharing of cost burdens will raise investment efficiency. Yokkaichi's flash memory production capacity will be roughly double that of Samsung's flagship plant. In addition, plants operated by Samsung and the American joint venture of Intel and Micron Technology are dispersed across several locations.
# # #
- Eric L. -
|RecommendKeepReplyMark as Last Read|
|From: Eric L||7/10/2016 10:35:20 AM|
|Western Digital CFO Transition: Mark Long succeeds Olivier Leonetti as CFO |
>> Western Digital Announces CFO Transition
Western Digital Press Release
July 6, 2016
Mark Long Appointed EVP, Finance; Will Succeed Olivier Leonetti as CFO on Sept. 1; Company Announces Preliminary Fourth Fiscal Quarter Financial Results and Earnings Date of July 28
Western Digital Corp. (NASDAQ: WDC) today announced the appointment of Mark Long to oversee the company’s finance organization as executive vice president, finance, in addition to his role as chief strategy officer. Long will succeed Olivier Leonetti as chief financial officer on Sept. 1, 2016. Leonetti is leaving the company to pursue other opportunities but will continue as CFO through Sept. 1, 2016, reporting to CEO Steve Milligan, and will oversee the completion of the company’s fiscal year-end reporting requirements. He will continue in an advisory role to the CEO through Oct. 1, 2016.
“The company is going through a strategic and organizational transformation with the integration of our HGST and WD subsidiaries as well as integrating the recently completed acquisition of SanDisk,” said Milligan. “Although in the early stages, we are already seeing the benefits of these strategic steps. As we build on our strategy-driven focus in a tightly integrated manner, it is the right time to combine the strategy and finance organizations and Mark Long is the right leader of this integrated team, with his extensive experience in financial and strategic planning. Olivier Leonetti has made a tremendous contribution to Western Digital in nearly two years as CFO. He played a key role through the successful planning, financing and completion of the SanDisk acquisition. The company is grateful for his contribution and his continued stewardship of our finances through the fiscal year-end reporting process.”
“I am proud of what we have accomplished at Western Digital, particularly the successful completion of the transaction with SanDisk,” said Leonetti, who joined WDC as CFO in 2014. “Western Digital has a first-class executive team and I am confident that the finance and strategy organization is in good hands with Mark.”
“I am honored to succeed Olivier and look forward to working with the entire team as we continue on the path of long-term value creation for all of our stakeholders,” said Long. “I cannot think of a more exciting time to step into this position as we integrate and evolve. There are significant opportunities ahead of us as we come together and strive to reach our potential as the leading storage solutions provider.”
Long has served as the chief strategy officer at Western Digital and HGST over the past three years and will continue in that role. He played a lead role in conceiving, executing and completing the SanDisk acquisition in addition to several other acquisitions.
Preliminary Fourth Fiscal Quarter Financial Results; Sets Q4 Earnings Call for July 28th
The company also reported preliminary financial results for its fourth fiscal quarter ended July 1, 2016. Reflecting the ownership of SanDisk Corp. as of May 12, 2016, the company now expects its fourth quarter revenue to be approximately $3.46 billion, compared to its earlier forecast of $3.35 billion to $3.45 billion. Non-GAAP gross margin is expected to be approximately 31 percent, consistent with its earlier forecast. The company now expects fourth quarter EPS, on a non-GAAP basis, to be approximately $0.72, compared with its earlier forecast range of $0.65 to $0.70. The company will report its final results for the fourth fiscal quarter after the market closes on July 28, 2016. # # #
- Eric L. -
|RecommendKeepReplyMark as Last Read|
|From: Eric L||7/18/2016 1:24:47 PM|
|Toshiba and Western Digital Open New Fab 2 Semiconductor Fabrication Facility in Japan|
Toshiba Corporation and Western Digital Corporation
Yokkaichi, Japan and Irvine, Calif.
Joint Ptress Release
July 15, 2016
Toshiba Corporation and Western Digital Corporation (NASDAQ: WDC) today celebrated the opening of the New Fab 2 semiconductor fabrication facility located in Yokkaichi, Mie Prefecture, Japan.
Expanded use of flash memory in smartphones, SSDs, and other applications is driving continued growth of the global flash memory market. The New Fab 2 facility will support the conversion of the companies' 2D NAND capacity to 3D flash memory, allowing realization of solutions offering higher densities and better device performance.
Construction of New Fab 2 began in September 2014. Following partial completion of the facility in October 2015, Toshiba and SanDisk (acquired in May 2016 by Western Digital Technologies Inc., a wholly owned subsidiary of Western Digital Corporation) worked together to implement leading-edge manufacturing capabilities for mass production of 3D flash memory, and first-phase production started in March of this year. The parties intend to further invest to expand production capacity over time, depending on market conditions.
In addition, Yokkaichi operations will leverage the site-wide integrated production system, which employs big data processing to analyze over 1.6 billion data points each day, to further improve manufacturing efficiency and the quality of 3D flash memory.
The parties are committed to working together to enhance the value they offer to customers and to continue innovation as market leaders.
Satoshi Tsunakawa, President and CEO of Toshiba Corporation, said, "Advanced technologies underline our commitment to respond to continued demand as an innovator in flash memory. We are enhancing manufacturing efficiency and the quality of our world-class facility. Building on that, we also plan investments of as much as 860 billion yen by FY2018, in line with the market situation. Our commitment is firm, and we are confident that our joint venture with Western Digital will produce cost competitive next generation memories at Yokkaichi."
Steve Milligan, Chief Executive Officer of Western Digital, said, "As a leader in non-volatile memory products and solutions, we are excited to be entering the 3D NAND era with our partner Toshiba. The New Fab 2 enables us to begin the conversion of our existing 2D NAND capacity to 3D NAND and continues our long-standing presence in Yokkaichi, Mie Prefecture, and Japan."
Overview of the New Fab 2
Structure of building: 2-Story steel frame concrete, five floors
Building area: Approximately 27,600m2
Start of construction: September 2014
Building completion: July 2016
About Toshiba: Toshiba Corporation, a Fortune Global 500 company, channels world-class capabilities in advanced electronic and electrical product and systems into three focus business fields: Energy that sustains everyday life, that is cleaner and safer; Infrastructure that sustains quality of life; and Storage that sustains the advanced information society. Guided by the principles of The Basic Commitment of the Toshiba Group, "Committed to People, Committed to the Future", Toshiba promotes global operations and is contributing to the realization of a world where generations to come can live better lives. Founded in Tokyo in 1875, today's Toshiba is at the heart of a global network of 550 consolidated companies employing 188,000 people worldwide, with annual sales surpassing 5.6 trillion yen (US$50 billion). (As of March 31, 2016.) Visit: www.toshiba.co.jp/index.htm
About Western Digital: Western Digital Corporation (NASDAQ: WDC) is an industry-leading provider of storage technologies and solutions that enable people to create, leverage, experience and preserve data. The company addresses ever-changing market needs by providing a full portfolio of compelling, high-quality storage solutions with customer-focused innovation, high efficiency, flexibility and speed. Our products are marketed under the HGST, SanDisk and WD brands to OEMs, distributors, resellers, cloud infrastructure providers and consumers. For more information, please visit www.hgst.com, www.wd.com and www.sandisk.com ###
Background on the WD/Toshiba JV
>> [July 04, 2016 | Nikkei] Toshiba snd U.S. partner Western Digital (WD) will commit $14.6 billion over three years toward stepping up flash memory production at their jointly run Japanese plant, in a bid to widen global market share. Western Digital inherited the operational tie-up at the Yokkaichi plant in Mie Prefecture, Japan when the theyr took over American rival SanDisk in May. The site in central Japan will receive a new fabrication facility, with new equipment to be installed in the existing production space. ... The plan is to boost 3-D memory production, with such chips accounting for 50% of the segment in fiscal 2017 and exceeding 80% in fiscal 2018. <<
>> Toshiba likely to bless a SanDisk-Western Digital deal (analysts)
Devika Krishna Kumar and Natalie Grover
October 14, 2015
Toshiba, SanDisk's partner in making memory chips, is more likely to sign off on a potential takeover of SanDisk by hard drive maker Western Digital than by rival memory chip maker Micron, analysts said. Micron Technology Inc and Western Digital Corp are in talks with SanDisk Corp about a possible acquisition, Bloomberg reported on Tuesday. The report came after months of intense speculation about imminent consolidation in the memory chip industry as a supply glut and cheaper products from China continue to drive down prices.
SanDisk will require Toshiba's approval to consummate a deal with either party. SanDisk uses Toshiba's foundries to make its chips and the two companies have an important intellectual property-sharing joint venture.
If Micron, which has its own foundries, buys SanDisk, Toshiba is likely to lose a lot of business. Moreover, Micron has a growing presence in the NAND-flash memory chips market and a tie up with SanDisk will immensely increase competition for the Japanese tech leader.
NAND-flash memory chips power solid-state drives, which are faster and more reliable than traditional hard drives, Western Digital' mainstay. SSDs are used in cloud computing, data centers, smartphones and laptops. "From Micron's perspective ... you could take out two competitors at once," Cowen and Company analyst Timothy Arcuri said. "If you can extricate SanDisk from the Toshiba JV, then you've taken Toshiba out of the NAND business and you've taken out SanDisk as well ... this would really catapult you to number 2. status behind Samsung." ... <Snip Rest> <<
# # #
- Eric L -
|RecommendKeepReplyMark as Last Read|
|From: Eric L||7/26/2016 9:34:36 AM|
|Western Digital announces next-gen 64 Layer 3D NAND |
>> Western Digital Announces World’s First 64 Layer 3D NAND Technology
256 Gigabit 3-Bits-Per-Cell Chip is the Smallest in the Industry
Western Digital Press Release
July 26, 2016
Western Digital Corp. (NASDAQ: WDC) today announced that it has successfully developed its next generation 3D NAND technology, BiCS3, with 64 layers of vertical storage capability. Pilot production of the new technology has commenced in the Yokkaichi, Japan joint venture facilities and initial output is expected later this year. Western Digital expects meaningful commercial volumes of BiCS3 in the first half of calendar 2017.
“The launch of the next generation 3D NAND technology based on our industry-leading 64 layer architecture reinforces our leadership in NAND flash technology,” said Dr. Siva Sivaram, executive vice president, memory technology, Western Digital. “BiCS3 will feature the use of 3-bits-per-cell technology along with advances in high aspect ratio semiconductor processing to deliver higher capacity, superior performance and reliability at an attractive cost. Together with BiCS2, our 3D NAND portfolio has broadened significantly, enhancing our ability to address a full spectrum of customer applications in retail, mobile and data center.”
BiCS3, which has been developed jointly with Western Digital’s technology and manufacturing partner Toshiba, will be initially deployed in 256 gigabit capacity and will be available in a range of capacities up to half a terabit on a single chip. Western Digital expects volume shipments of BiCS3 for the retail market in the fourth calendar quarter of 2016 and to begin OEM sampling this quarter. Shipments of the company’s previous generation 3D NAND technology, BiCS2, continue to customers in retail and OEM. ###
- Eric L. -
|RecommendKeepReplyMark as Last Read|
|From: Eric L||7/26/2016 2:51:32 PM|
|Western Digital SSD Acquisitions ... |
... including SanDisk who also made several SSD acquisitions.
Who's who in SSD? - Western Digital
Western Digital's presence in the SSD market has developed by means of 7 successive acquisitions of SSD companies (so far).
I think it is inevitable - given the changes now taking place in the market, WDC's past failures to organically grow its own SSD IP base, and the growing gap which WDC has in the SSD market (particularly in the DIMM wars and NVMe markets) that more SSD companies and technologies will need to be acquired by WDC in the next 2 years.
Until May 2016 WDC's main surrogate and recycler of SSD IP within the enterprise SSD market was its subsidiary HGST. But the acquisition of SanDisk which closed in May 2016 brings with it a bigger quantity and range of SSD product lines and technologies than any of the previous acquisitions which were managed by HGST. I think that the scale of the SanDisk acquisition will mean that readjustments will have to be made about the roles of the various brands now under the control of WDC.
I wouldn't be surprised to see readjustments in the brands, With the stongest candidate in each case being repurposed for big markets such as consumer, enterprise and cloud.
WDC's key SSD acquisitions - from SSD acquisition history
For clarity - Western Digital is shown as the acquiring company below - although in some cases - the acquisitions were done by WDC's SSD surrogate HGST.
In March 2009 - Western Digital entered the SSD market by acquiring SiliconSystems for $65 million in a cash transaction. SiliconSystems was a Top SSD Company in the industrial SSD market. WDC didn't continue the development of the acquired product line into the MLC industrial era.
In March 2011 - Western Digital announced it would acquire HGST for approximately $4.3 billion. Although the primary motive was hard drives - the companies said they would put more resources into SSDs too. The acquisition took a year to complete, and as a result WDC acquired a SAS SSD product line.
In June 2013 - Western Digital announced it had agreed to buy Stec for approximately $340 million. Stec at the time had a market proven but ageing SAS SSD product line and an established market presence in the industrial and military SSD markets. WDC didn't maintain the military and industrial SSD product lines after the acquisition.
In July 2013 - Western Digital announced it had acquired VeloBit (an SSD software company operating in the SSD auto-caching market).
In September 2013 - Western Digital acquired Virident Systems (a leading PCIe SSD company) for approximately $685 million in cash.
In December 2014 - Western Digital acquired Skyera - which at that time - due to its unique big controller architecture - had a commanding lead in rackmount storage capacity density in the petabyte SSD market. WDC almost immediately after the acquisition end of lifed Skyera's product line. And although it is not yet clear where the acquired systems IP will be used - it has many possible applications within cloud focused rackmount systems.
In October 2015 - Western Digital agreed to acquire SanDisk for $19 billion. SanDisk at that time had entered the standard rackmount SSD market and had enterprise SSD product lines in the PCIe SSD market (primarily from Fusion-io), Software (from FlashSoft and other acquisitions) and SAS SSDs (from SMART Storage). SanDisk was also a leading supplier of consumer SSDs and flash memory. # # #
The two preceding tables are from an AnandTech article which is excerpted in the following post linked back to this one.
- Eric E-L -
|RecommendKeepReplyMark as Last ReadRead Replies (1)|
|To: Eric L who wrote (11050)||7/26/2016 4:52:20 PM|
|From: Eric L|
|Western Digital SanDisk Acquisition Challenges (and Opportunities) ... |
"The acquisition of SanDisk by Western Digital not only transforms the latter into a vertically-integrated maker of storage devices and platforms. ... <snip> On paper, Western Digital is now the only company which can build (pretty much) any type of storage device, from a single-chip SSD for tablets to a storage array featuring SSDs and NAND flash. ... <snip> ... The biggest challenge for Western Digital today should be to integrate all of its parts into one company, eliminate redundancies, streamline product lineups, avoid internal competition and keep up the pace of innovation. "
>> Western Digital’s Acquisition of SanDisk Officially Closes
May 16, 2016
<snip> By taking over SanDisk, Western Digital will become one of the world’s largest suppliers of storage devices and solutions, which will be able to address virtually all kinds of storage needs. ... <snip> ... The combined company will control over 40% of the HDD market, around 10% of the SSD market and a substantial chunk of NAND flash supply (together with Toshiba, SanDisk operates the world’s largest NAND flash production complex).
The new entity will also be very powerful financially: last fiscal year Western Digital achieved revenue of $14.6 billion and net income of $1.5 billion (down from $15.1 billion and net income of $1.6 billion a year before), whereas SanDisk’s annual revenue for the 2015 fiscal year was $5.56 billion, a decrease of 16% from 2014. But while the combination of Western Digital and SanDisk has a huge potential, it will not be easy for the two companies to become one, especially keeping in mind that Western Digital and SanDisk have not fully absorbed HGST, Fusion-io and a number of other companies they acquired in the recent years.
Portfolio Overlap: In the coming quarters, Western Digital and SanDisk will have to optimize their product lineups and either integrate or eliminate redundancy projects, two rather tough challenges.
The explosive growth of the solid-state storage market helped to create rather innovative developers of NAND-based storage solutions for enterprises and hyperscale data centers, whereas established players faced a new reality and had to become parts of bigger entities. To strengthen its portfolio of products for the lucrative data center market, SanDisk has acquired Pliant Technology, FlashSoft, Schooner Information Technology, SMART Storage Systems and Fusion-io in the recent years. Because of its multi-billion takeovers, SanDisk greatly expanded its portfolio of products as well as intellectual property. What is important to note is that even now some of SanDisk’s products overlap and address essentially similar market segments.
[see tables in previouys post]
Western Digital was not sitting idle too. In addition to HGST (which currently absorbs the majority of Western Digital’s enterprise NAND-related assets), the company bought Virident, STEC, VeloBit, Amplidata and Skyera. Western Digital is not new in the SSD world: the takeover of SanDisk adds NAND flash manufacturing capacities, something that Western Digital needed to become a vertically integrated provider of HDDs, SSDs and all-flash storage arrays. This means that in addition to Western Digital gaining a lineup of consumer SSDs, it does mean there are a number of overlapping product lines and a lot of staff in similar roles.
A major challenge for Western Digital and SanDisk will be optimization of their workforce in the coming quarters. It can be expected that the two companies may have to lay off a number of people and there are two problems with this. Firstly, takeovers by large corporations are usually followed by brain drain on all levels: both companies have already lost many people from Fusion-io, Skyera, Amplidata and others. The integration of SanDisk into Western Digital could accelerate departures of other people. Secondly, workforce optimizations amid resignations might disrupt product development and execution of roadmaps.
Keeping in mind that Western Digital is now in the midst of HGST integration, the situation becomes even more complicated. Until recently, WD and HGST had separate R&D divisions and product roadmaps. Unification of different research and development operations can have short-term effects on R&D because usual teams and workflows are disrupted and then new ones are yet to be established. Adding SanDisk to the equation essentially makes things even more difficult. But that is not the only challenge.
Product Lineups: The Competition Continues
At present, Western Digital’s subsidiary HGST uses NAND flash memory from Intel (or IMFT/Micron) to make its enterprise-grade SSDs. Keeping in mind that the two companies have a supply and development agreement in place, it is highly likely that development of solid-state drives based on Intel’s 3D NAND is well underway. Moreover, since Intel and Micron seem to pin a lot of hopes on their second-gen 3D NAND (which production starts this summer), it is possible that HGST will have to use this type of memory as well. A good news is that Skyera’s skyHawk FS all-flash storage array should support various types of NAND memory (including SanDisk’s) because Micron, Toshiba and SK Hynix all invested in the company later acquired by Western Digital and Skyera worked with all of them. Meanwhile, HGST’s FlashMax PCIe SSD accelerators (which it got from Virident) rely on Intel’s NAND, whereas S-series SSDs (which the company got from STEC) use Toshiba’s memory.
Since we are talking about enterprise-grade storage, for which development and validation can take years, it is clear that HGST will continue to use third-party NAND for the foreseeable future, unless Western Digital terminates the agreement with Intel, drops already developed products and replaces them with those designed by SanDisk. Even in this case, it will have to sell Intel-based Ultrastar and FlashMax drives for some time so not to upset customers.
Meanwhile, SanDisk naturally uses its own NAND flash as well as its own controllers to make its SSDs for enterprise markets. Such drives compete against products designed by HGST and not all customers of the two companies could easily switch suppliers of SSDs because their storage systems are tailored for particular drives. In short, HGST’s Ultrastar and FlashMax will continue to compete against SanDisk’s Lightning, Optimus and Fusion ioMemory drives/accelerators for quite a while. Moreover, it looks like Western Digital’s skyHawk FS will also compete against SanDisk’s InfiniFlash to a certain degree.
While the integration of the two companies into one seems to be challenging, the addition of SanDisk’s consumer SSDs to Western Digital’s product lineup is a big deal. It is not a secret that PC form-factors that cannot house 2.5” HDDs are gaining popularity, whereas the total available market of HDDs is declining. It is also noteworthy that there is a rather tough competition between low-end SSDs and HDDs for inexpensive notebooks. By offering both SSDs (especially single-chip SSDs like iNAND) and HDDs, Western Digital will be able to address traditional laptops, emerging 2-in-1s, tablets, ultra-thin notebooks and many other new types of PCs. Moreover, with SSDs and HDDs in its portfolio, Western Digital will be able to offer just what PC makers need for low-cost machines (without having to reduce margins to minimal levels just to get a design win). While SSDs will naturally compete against HDDs, this will unlikely hurt Western Digital. On the other hand, entering SSD market and competing against Samsung is a tough challenge, especially with overlapping products, internal competition, redundant workforce and the necessity to align roadmaps of two companies as well as Toshiba.
Impact on Rivals
Two interesting things that we will have to observe in the coming years will be the impact of Western Digital’s acquisition of SanDisk on the market of storage in general as well as on their rivals, namely Intel, Micron, Samsung, Seagate and Toshiba.
While Intel has a broad SSD portfolio, which includes client and server drives, enterprise storage has been Intel’s primary focus from the very start. Development of storage class memory (3D XPoint) as well as its long-term vision of data center architecture indicates that Intel wants a significant and lucrative chunk of the enterprise storage market. Since the company is a major supplier of server CPUs, it is plausible that it will be a main provider of emerging NVDIMM SSDs for the future Intel Xeon platforms. Western Digital (HGST) will remain Intel’s SAS SSD development partner for a while, but Intel does not plan to supply 3D XPoint memory to any other makers of drives at this time, meaning HGST will not be able to address the highest end of the enterprise SSD market with 3D XPoint. However, since both SanDisk and Western Digital have been developing various storage platforms tailored for particular needs (such as HGST’s Active Archive System and Fusion-io’s InfiniFlash), there will be huge parts of the market that the combined company will be able to address without directly competing against Intel. Moreover, SanDisk is developing storage-class memory with HP, which will help to compete against Intel’s 3D XPoint eventually.
Micron was historically focused on the production of DRAM and NAND memory, but in the recent years it accelerated its push into actual products based on their chips. Right now, the company offers a portfolio of SSDs for virtually all market segments, including big data analytics, databases, hyperscale/private data centers as well as virtualized environments. Micron will continue to compete against SanDisk’s SSDs for respective segments and will be able to build hybrid storage solutions when/if needed together with Seagate. What Micron cannot do today is to offer all-flash storage arrays like Western Digital’s Skyera. Moreover, with Western Digital’s takeover of SanDisk, Micron will lose a customer for its NAND flash memory eventually, which is not necessarily a bad thing, given the company’s focus on products and not on commodity chips.
Speaking of Seagate, we should note that the company is facing major challenges. The firm does have state-of-the-art storage technologies, it offers Nytro solid-state storage accelerators, SandForce SSD controllers and various solutions in its arsenal (in fact, the company even claims to havethe world’s fastest SSD in its portfolio). However, Seagate does not have its own NAND flash production (unlike two of its competitors, Toshiba and Western Digital), which is why its chances on the market of consumer SSDs are somewhat limited due to cost reasons and strong competition from Samsung (the only big fabless SSD suppliers are Kingston and LiteOn). Being unable to supply storage products for emerging PC form-factors greatly limits Seagate’s growth potential in general because while HDDs are not going anywhere in the next decade, or even two, their usage in the client PCs is set to decline, and so far sales of high-capacity HDDs for hyper-scale data centers have not offset declines of client hard drives. Recently Seagate announced plans to reduce its own HDD production capacities to improve financial positions, but it remains to be seen how this could help it to guarantee either a steady supply of NAND flash or its own NAND flash production capacities. In any case, Seagate will continue to fiercely compete against Western Digital in the growing market of high-capacity hard drives for cloud data centers and that will impact the third remaining maker of HDDs, Toshiba.
Right now, Toshiba is the only company in the world which sells both SSDs and HDDs, an exclusive advantage it is about to lose. The company does not have helium-filled hard drives in its arsenal to address the most lucrative part of the hyper-scale data center market with 8 TB and 10 TB models. Moreover, unlike its partner SanDisk, Toshiba did not acquire any solid-state storage startups to address the market of all-flash storage systems for data centers. The company still has very advanced SAS and PCIe SSDs in its lineup, hence, it can compete for the market of solid-state accelerators, even though its capabilities are somewhat limited here due to the lack of sophisticated enterprise-grade caching software. While Toshiba has its own NAND flash and HDD production capacities, it yet has to gain technologies (software, hardware, etc.) to better compete for lucrative parts of the storage market. At present, Toshiba is in the midst of a financial scandal and it is hard to expect it to focus on revamping its storage capabilities at this time. However, it remains to be seen what happens next.
SSDs? HDDs? The Industry Needs Solutions!
While client storage technologies are important, enterprise storage will remain the most lucrative segment of the market. The data center today is evolving very quickly and for many applications a dedicated level of multi-tiered storage of HDDs, SSDs or even a combination of them, is still not enough. Don’t get me wrong here: we still need purpose-built hard drives and solid-state drives, but in many new cases they are not installed in general purpose servers but are a part of storage solutions that are designed for particular purposes. Historically, such solutions came from companies like EMC, IBM, HP, Hitachi Data Systems, Netapp and so on. However, in the recent years the market of external storage solutions began to transform.
Firstly, a variety of startup companies has started to sell all-flash storage solutions. These can offer a number of advantages since such firms usually build everything (except flash) in-house and use custom technologies and know what they are doing very well. All-flash arrays, such as SanDisk’s InfiniFlash (512 TB of NAND, 2 million IOPS, 3U form-factor) or Western Digital’s Skyera skyHawk FS (136 TB of NAND, 400K IOPS, 2.4 GB/s, 1U form-factor), provide numerous performance and cost advantages over traditional HDD-based data storage solutions, which is why such all-flash arrays are gaining popularity these days. Furthermore, since they are purpose-built, they deliver performance right out of the box and solve rather complex problems.
Secondly, traditional makers of hard drives in the recent years entered the market of storage systems with Active Archive (HGST), ClusterStor/OneStor (Seagate) and some other HDD-based storage arrays. Such devices are based on high-capacity hard drives and are designed to store massive amounts of data. While sales of many mission-critical storage systems are declining because of all-flash arrays (we see it in the reports of HDD makers as well as industry reports like the one linked above), systems optimized for archive and nearline storage are gaining traction.
To get expertise to develop storage arrays, both Seagate and Western Digital acquired multiple companies in the last few years. However, only Western Digital can now build all-flash storage arrays using its own NAND flash, own controllers and own SSDs. Meanwhile, Seagate will have to rely on SSDs co-developed with third-party providers. A good news is that the company has a long-term development agreement with Micron, but it remains to be seen whether Seagate will be able to offer anything comparable to all-flash arrays from SanDisk or Skyera.
While storage solutions may not be the primary business for Western Digital today, in a world where IT is moving to either private or public clouds, expertise in hybrid-flash and all-flash storage arrays is hard to overestimate. Obviously, the company will need different types of products to address public and private cloud customers. Hypothetically, as one big company with various assets, Western Digital could be able to address everyone with the right products, provided that it manages to smartly integrate SanDisk, HGST and others without losing valuable assets and people en route.
The acquisition of SanDisk by Western Digital not only transforms the latter into a vertically-integrated maker of storage devices and platforms, but reflects many industry trends. Client devices transit to flash storage, whereas IT computing is moving to the cloud. To offer the right solutions, Western Digital needed a new set of assets and the takeover brings them to the company.
On paper, Western Digital is now the only company which can build (pretty much) any type of storage device, from a single-chip SSD for tablets to a storage array featuring SSDs and NAND flash. In many ways, Western Digital is now a competitor not only to companies like Seagate, Toshiba, Micron and Samsung, but to EMC, HPE, Intel, Hitachi Data Systems and others. Fighting many wars is a tough business and it remains to be seen how well will it work out for Western Digital.
However, winning market share from EMC or HPE is not the main concern of the company right now. The biggest challenge for Western Digital today should be to integrate all of its parts into one company, eliminate redundancies, streamline product lineups, avoid internal competition and keep up the pace of innovation. ###
- Eric L. -
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