He was pushed
Seagate’s Bill Watkins, CEO since 2004, apparently lost the confidence of the Seagate board and was replaced by former CEO and current Chairman Stephen Luczo. Why?

Not Watkins’ sometimes bizarre public statements: that would’ve gotten him the boot years ago. A slow reaction to the worst recession since the 1930s forced the issue.

The bigger problem
In the short-term global demand for disk drives is down. But managing production cuts is easy compared to Seagate’s real problem: creating new product demand.

That is Seagate’s long-term challenge. The turmoil created by the rapid rise of flash and cluster-based storage means there will be more changes in storage in the next 5 years than in the last 15.

Suggestions for the new CEO
Every company faces tension between the “business as usual” guys and the forces of change. At Seagate inertia has overwhelmed innovation for too long.

The confusion around flash strategy is one symptom. The inability to sell the Integrated Storage Element, now a Xiotech product, is another.

Seagate needs to climb down from the minimum 1 million unit order mentality and open itself to investing in a variety of small businesses that may grow large. Even those that don’t will be educational.

A few ideas:

  • 10K SATA drives. WD has built a successful consumer franchise with their Velociraptor 10K SATA drives. But system vendors won’t touch it without a second source of supply. How hard is it to put a SATA interface on the Savvio 10K SAS drives?
  • Cold archive disk. Disk is the new tape — so why not make a business out of it? In less than a year Seagate could have an archive drive that would meet consumer needs for long-term personal data storage. Long-lfe lubricant, reduced RPM, a nifty USB docking station and a 7 year archive life and within three years you’d be selling tens of millions of drives into a new segment.
  • Get serious about flash. This has two elements: reducing disadvantages in speed and durability — see 10K SATA drives above – while continuing capacity growth; and rethinking flash-based storage. Use flash’s unique capabilities. Seagate needs a flash skunk works/biz dev team with the charter to incubate new concepts.
  • Get serious about the home. Seagate may never become a system supplier to the home — although it could — but it certainly can become a leading supplier of storage components for the home. The cold archive disk is just one idea.
  • Do a root cause analysis on the ISE failure. Xiotech is turning the ISE into a real business where Seagate failed. That’s just wrong. Why couldn’t Seagate market a Superdisk that doesn’t compete with existing customers? Understand that problem and you will position Seagate for more decades of success.

The StorageMojo take
The nimble, innovative Seagate of years past has lost its mojo. Focused on million drive orders the company has ignored tectonic shifts in the storage market.

The good news is that digital storage demand is on a long-term growth trend. Disk drives aren’t buggy whips – the company’s best days are ahead of it.

Investing in new products while cutting production of old ones is painful. But the alternative is worse.

I hope Seagate’s new management will rise to the occasion. Seagate people are looking for leadership who will challenge their creativity and unmatched technological depth.

Courteous comments welcome, of course. Especially from Seagaters, of course!