The Skyera acquisition could signal a sea change in the relationship between storage device and system makers. It is overdue.
Traditionally, device makers avoided competing with their customers. This is what it made Seagate’s acquisition of Xiotech (now X-IO years ago so surprising.
StorageMojo was critical of Seagate’s Xiotech acquisition because there were large and profitable intermediate steps that Seagate could’ve taken – which they belatedly have – rather than diving into the array business. Ultimately Xiotech didn’t work out for Seagate.
Are things are different today?
Competing with customers is much less of an issue today because:
- There are only
43 hard drive vendors.
- Most system OEMs are moving to flash and SSDs are fast as they can anyway.
- Intel/Micron and Samsung are dominating enterprise SSD sales, so Seagate and WD have little business to lose.
Today, unlike the past, there’s a clear, low-risk path for WD, Seagate, and Toshiba to move into the storage system arena. In fact, given Intel’s and Samsung’s SSD success, there’s a positive reason to move soon if they want to play any role in future enterprise storage.
Every silver lining has a cloud. And in the case of WD and Seagate, the problem is that they are component vendors, not system vendors.
Their executive teams have to wrap their heads around software, service and support to build a viable systems business. It took HP – originally a test equipment company – a couple of decades to develop a strong systems engineering perspective and that came from acquisitions, not internally.
WD and Seagate don’t have decades.
The StorageMojo take
The storage systems business needs new blood. The old enterprise model is dying and the new model will have much lower margins for mainstream storage (see The 30% solution).
WD and Seagate have a tremendous opportunity – Seagate’s Kinetic initiative is quite promising – if they navigate the complex issues required to build a systems business. While it would be difficult I’d like to see them try.
Courteous comments welcome, of course.