They bought IBM’s business, not the brand
Things aren’t good when an unsourced report claims Hitachi is selling its loss-making disk and the stock rises 7% in the biggest 1 day percentage gain in 4 years.
Hitachi denied it. Sounds like the bankers are trying to get something going. “More fees!”
Spend $2 Billion and what do you get?
I day older and deeper in debt. And the disk industry’s premier research group. And a contract with IBM to buy a bunch of drives. So why aren’t they minting money?
Consumerization is the new black
Hitachi is your basic $88 Billion – more if the dollar keeps sliding – company with 384,444 employees. The org chart (pdf) makes the Pentagon look like a model of organizational clarity.
Where did the disk business go? I had it here somewhere.
The “Disk Array Systems Business” is on the chart. The “Storage Area Network Systems Solution Division” is on the chart. The disk drive business isn’t. Did they forget they own it?
So a rumor about the sale of a business that doesn’t even show up on the org chart drives your stock up 7%. Ouch.
Delusional marketing will do that to you
Hitachi makes good drives. They just don’t know how to tell people. Case in point: the Hard Drive by Hitachi marketing program.
The program centers around the usage of the Hard Drive by Hitachi icon (figure 1). The icon signifies that the hard drive integrated as a key component in your product(s) is manufactured and backed by Hitachi, a premier supplier of high quality hard disk drives. Participating companies can utilize Hitachi’s reputation for quality and reliability as well as technology leadership to strongly differentiate their products in today’s competitive marketplace.
Name 1 non-geek consumer who knows Hitachi makes quality drives. Give up? Me too.
Oh, and here’s the logo:
Not quite as zippy as “Intel Inside” is it? I can just see the wise graybeards back in Japan nodding “we’ll save money with a 2 color sticker. Intel sticker costly. We don’t need that. After all, we Hitachi.”
I’m sure this is about as much as the American marketing folks could get past the “Hitachi Corporate Cross-Functional Sales Prevention Strategic Planning and Execution (literally) Steering Committee.” Grim.
The StorageMojo take
Disk drives are modern marvels and Hitachi is one of the best vendors. But Hitachi isn’t a brand to conjure with in America or Europe. Matsushita, years ago, bought every American consumer electronics brand that had any cachet and milked them ever since. Plus they built their own brands, like Panasonic, that now resonate.
What has Hitachi done? Him-m-m? “Hey, I know, let’s be so boring that we hypnotize customers into buying our products!”
Hitachi Japan: if you want a successful American disk drive business you need to get out of your nice comfortable rut and buy somebody like Iomega, that has a brand and some distribution and get serious about wooing consumers. IBM won’t buy your drives forever. America is a consumer society – or at least it was until the ecstasy-fueled sub-prime party ended – and you need consumers to buy your drives. Red labels may work for Bass Ale, but you have a different problem: no one knows who you are.
Comments welcome. Warning: when I upgraded my anti-spam software I lost the ability to look at the spam queue. So if you send a comment and it doesn’t show up in a day it may have been eaten by Akismet. Please resend. Yes, I sent the developers a note about it, but apparently I am a special case. Maybe the next update will fix it.
Iomega? Puh-leeze! They’ll never stop wiping the Zip/Jazz ‘click of death’ grime off their products, primarily because they never acknowledged the problems and never made good on their obligations. Consumer-friendly they’re not, and a lot of consumers will never buy Iomega again.
Seagate – now there’s a successful disk vendor which manages very well without being a household name. Its 5-year warranties on its consumer products (some new Maxtor-acquired brands excepted) probably help a lot, and if Hitachi’s disks are worthy of equal respect then they could offer a similar warranty without harm to their bottom line (and it would help erase fears arising from the IBM East European GXP failures a half-dozen years back).
After all, aren’t most purchases of commodity drives still driven by OEMs, not end-users? For every consumer who waltzes into Circuit City to buy a drive (and then in many cases buys solely based on price, not brand), there must be dozens (especially if you include bulk corporate purchases) who get their drives safely wrapped up inside desktop or laptop boxes which will never be opened – and it’s the drives in those boxes which really drive a vendor’s volume (with perhaps disks in external arrays vying with consumers for the next spot in line these days, and the faster the move toward using desktop-commodity drives in arrays goes, the solider their second-place position will become).
Making those OEMs happy should be Hitachi’s first goal, and visibly backing their drives as well as Seagate does (and with comparable pricing) would be a good start.
– bill
“Name 1 non-geek consumer who knows Hitachi makes quality drives.”
Indeed. And it’s worse than that:
This geek consumer who influences the purchases of some non-geeks is a hard sell for Hitachi. I and a poor ($) friend for whom I built a system at cost in 2001 missed buying Deathstars by such a tiny bit that I still shudder (would have been barely tolerable for me, but a nightmare for my friend).
Up to that point, I’d been happily buying IBM Ultra and Deskstars for years.
After the sale, Hitachi needed to convince people like me that they’d straightened out this group. But they aren’t doing a good job proactively, and when I do my due diligence, well, earlier this year their top of the line SATA drives (including the 1TB model) have 3 year warranties in the US.
Seagate 7200s were still at 5 years (Maxtor is their 3 year brand). For me, with arrays or mirroring and real backups, I plan for 5 years of service from each system I build, I plan their replacements, keep cold spares, etc. etc. etc. As long as Seagate makes “acceptable” drives, there’s no way I’ll touch a 3 year warranty drive, especially when I don’t have to pay anything close to 2/5ths more for it.
And as you keep usefully pointing out, it’s in this SATA area where the real potential is, certainly for selling *huge* volumes of of higher profit margin drives.
Hmmm, I’ll also note that Fujitsu’s consistent record of inconstancy starting with the Eagle and Super Eagle a quarter century ago does not give me a warm and fuzzy feeling about Japanese disk drive manufacturers….
Does anyone know what Samsung is up to? My overseas friends (where Seagate doesn’t offer good warranties) keep raving about Spinpoints, but here their warranty is 1 year according to their web site, 3 years according to NewEgg. Neither will prompt me to move from Seagate, no matter how great Samsung’s technology is (e.g. my LCD monitors, including my new 24″ from Dell (NICE), are made at the joint Sony/Samsung factory, and of course their DRAM is world class).
The Deathstar drives definitely hurt Hitachi. However, I just bought a Travelstar 7K200, and am extremely pleased with it.
Maybe their new CFO (from WD) will have an impact.
Interestingly Robin,
In my experience both HDS and HP seem to install a similar number of Hitachi and Seagate drives in their USP/XP’s. Ive seen quite a few USP/XP’s and it would be fair of me to day that the split between Hitachi drives and Seagate is roughly 50/50 or may be 60/40 in favour of Hitachi drives.
I was really suprised when I first started getting into this stuff in the 9980 days and first noticed this. I personally would have expected at least HDS to push the Hitachi drives over the Seagate.
Not a great advert when your have your own disk manufacturing business and you fill your own kit with another manufacturers disks!
Nigel
Oh and BTW I know one non-geek who knows Hitcahi makes quality hard drives…. ME!
You all need to remember that everything is long term in Japan and a large company such as Hitachi can always improve on quality. Those Eagle drives from Fujitsu were very very good and played a major role in the destruction of the (then) well established US (CDC) disk drive business. There are only two disk drive manufacturers left in the US…. and history does repeat itself.
I agree that the “Deathstar” image is the biggest hurdle Hitachi has to overcome to appeal to aftermarket disk buyers like me. IBM’s reputation took a huge hit with the kind of geeks who buy and install their own drives (or spec them for servers), and Hitachi bought the drive business soon afterward — giving many of us the impression that IBM was dumping the disk business to save face. If Hitachi wants to appeal to these kinds of buyers, they need to market reliability first (yes, a 5-year warranty would be a good start)… and once they’ve established a reputation as builders of quality products, THEN they can market the brand.
BTW Nigel, how does posting comments to a storage-focused blog qualify you as a non-geek? 🙂
Richard,
If by CDC you mean Control Data, they were bought by Seagate, and have played a critical role in Seagate’s success. And considering that the US companies have over 50% market share, and only 7 companies in the world make HDD’s, well, the US isn’t doing too badly.
Tony,
In those days, CDC also had good technology and a dominant market share and to say that they were ‘bought’ is a very kind gesture…. its much like DEC & Compaq.
It is becoming noticeable that Seagate lags in new product releases and in spite of a very high level of manufacturing automation needs to manufacture a long way from home.
I am not so sure that they are still in full control of the various critical parts such as disk heads and platter and … if not.. this can make or break their quality & cost structure.
Richard,
I wouldn’t say overall Seagate or WD lags in technology – some product examples are the Momentus 7200.2 and Raptor.
I’m not sure I’d call any HDD manufacturer “highly automated” – at least not from the factories I’ve seen – Hutchison Technology supposedly is (they make suspensions in MN and ND), but most of the drive parts are manufactured in the low cost parts of Asia (HSA’s in Thailand, media in Malaysia, E-blocks and complete drives in China, etc).
Seagate still is highly integrated, and the industry is moving that way – WD is now integrated, having bought ReadRite and Komag. There’s only one merchant supplier of HSA’s left (TDK) and three media suppliers IIRC.
Robin:
“Those Eagle drives from Fujitsu were very very good and played a major role in the destruction of the (then) well established US (CDC) disk drive business.”
Absolutely. I started using Eagles in 1983 and loved them.
My point here is that Fujitsu seems to have a pattern of coming out with something great like the Eagle, and then making a flub, like the Super Eagle’s unreliable electromechanical shipping lock.
On the other hand, they saved my bacon in 1987 when I took over a failing new system installation and threw away a bunch of bad DEC drives for 5 1/4 and 8 in Fujitsus, and those systems stayed in service for a length of time that still amazes me (1999 or so).
The last time I bought Fujitsu drives was back in the early ’90s; since then, I haven’t watched them too closely since I keep reading every once in a while that a new generation of their disks aren’t reliable in the field. It’s not ythat they can’t produce the vert best stuff, it’s that they can’t do this consistently.
And this pattern has gone on so long (since the Super Eagle), well, I’m probably being unfair, especially by not paying close attention to them lately, but it’s a bit like “No one every got fired for buying IBM”. Selling Fujitsu drives to my superiors was easy for a while after the Eagle came out, but when that memory faded (or I had moved to the microcomputer world with people never knew about the SMD days), well, it became too great a job risk in my estimation, especially since I was a programmer who only did this sort of “jack of all trades” stuff in special situations like startups and messed up units of academia.