WD and Seagate now make 87% of all disk drives. Unsurprisingly, they just slashed warranty on various drives down from 5 to 3 years, and even down to only 1 or 2 years for some models. Oligopoly will suck for us consumers.
$1.4 billion, mates. $1.4 billion for a business with manufacturing plants, complicated global logistics... Now let me remind you that Facebook is valued 85 (!) times more.. o_O
Not really, what disappears is the Facebook "potential" to make money, and the valuation is done thinking at this possibility. Now if you look at it in this way, billions of people using Facebook can be monetized probably much better in the long run compared to selling a new HD from time to time to millions.
Actually, it's not purely opt-in. Remember when our tax money "rescued" the banks because of their reckless lending/investments less than two years ago?
That potential will be translated in quarter results sooner or later. I think the gap expressed in potential and real stock value between customizers who use your product and non paying users who consume your product is too big nowadays and will be narrowed abruptly.
"""billions of people using Facebook can be monetized probably much better in the long run compared to selling a new HD from time to time to millions."""
As if this has worked well in the past for other hyper-valued web crap...
(Which reminds me, anybody remembers that ole VA Linux company? Where are they now?)
VA Linux is now Geeknet and is basically ThinkGeek and a few other minor properties (/., sourceforge, freecode). They've shed all of their other business lines, hardware, consulting, Animation Factory, etc.
Virtually all of their business news for years has been ThinkGeek related (which is doing pretty awesome), and various corporate level failings such that all of their other properties have always been a drag on the company, frequently throwing it into the red despite having an extremely profitable e-commerce division.
Facebook is the largest seller of online display advertising in the world (bigger than Google), and they've still got a relatively immature advertising platform.
Hard drives are also commodities, which means they sell near cost. If Samsung charges $10 more, people buy from another maker. Facebook is almost the exact opposite: its userbase means that, right now, there is no homologous replacement (including Google+, because they don't have the users).
Which doesn't mean FB is "worth" what it's worth—to me it seems overvalued, but then again no one is holding a gun to my head and forcing me to buy its stock. The nice thing about markets is that we can bet with our money, or not.
On the other hand, online user bases are notoriously mercurial. Facebook's valuation implies an assumption that Facebook won't fall victim to the forces that have claimed every social site to come before it.
That's a pretty gutsy assumption, considering Facebook could plausibly be seriously damaged by something as simple as kids deciding they don't want to hang out at the same place their parents do.
You do realize you could say the same thing about pretty much every company in existence. No-one ever stays on top forever, it's a question of how long you can stay on top for and how much profit you can generate over that period.
1) SSDs are taking over the market, and that favors flash suppliers like Samsung.
2) All the research dollars to increase sizes just drive the prices down.
3) At some point soon, there will be no need for further drive size increases. Unless someone comes up with a more space-hungry format than 1080p video.
In reference to #3, there are 2k and 4k video formats that will likely make the jump to consumer level soon. Saw an 80" LCD TV the other day that looked pixellated - higher res would help.
A company that makes really crappy disk drives. I've RMA'd so many of the newer Samsung's I've lost count. At this point, certain models fail so much that I toss them when they fail, and I only ever use them in mirrored arrays (with other non-Samsung's!).
Fortunately, there is more competition in the SSD space. And given that SSD will probably become the norm in laptops and desktops, this shouldn't be a problem for most people.
The SSD market is starting to collapse in on itself as well. Most of the smaller controller manufacturers are starting to be bought by rivals and I'll be amazed if Sandforce makes it until 2013 without being bought. Plus flash chips are already a pretty small market.
Are they all from the same country? Either way, the PC industry and the related component industry is fading away, so Samsung did the right move here. They probably want to focus more on the mobile markets.
(According to Wikipedia...) Seagate and WD are both have their HQs in California but Seagate is incorporated in Ireland. They also have a wafer fab in Northern Ireland.
Apple is the largest buyer of SSDs in the world, but their largest supplier has been Samsung, a company they've been increasingly at odds with in the phone business.
In one day, it is announced that Samsung has sold this business, and that Apple has purchased a competing SSD supplier. Just like that, the shape of the market shifts dramatically.
"In one day, it is announced that Samsung has sold this business, "
Not really, they had sold the hard drive business, but not the SSD business. Read the article, you will notice it says that it provides Seagate a LINK with the SSD business, not with the business itself.
For anyone that is curious about Seagate's SSD play and have been waiting for them to do something customer-facing for a while now: they have actually been doing enterprise flash storage for years, but I would assume through this acquisition we will now see official customer-facing drives being sold next year.
Likely rebranded Samsung 830s for starters (which is a solid drive) and hopefully get some updates and a common controller/firmware between the consumer drives and enterprise drives in 2014/15 to bring them in more a competitive lineup with the SanForce controllers that are dominating (note: still waiting to see what the 3rd gen Intel's perform like, they may change the landscape. Hard to say at this point).
Not thrilled to see only two options when it comes to spindle drives, but I imagine those aren't long enough for this world to really create a hub-bub.
Should they cancel an acquisition because of a temporary manufacturing problem? IMO the flooding shouldn't affect our thinking about whether these deal are competitive or anticompetitive.
When there are few suppliers, depressed demand makes it easy for oligopolists to behave like monopolists.
Should they cancel the deal? Certainly their shareholders wouldn't like them to do it out of the kindness of their hearts. I do think that competition watchdogs should be looking at HD mfers very closely now.
"The agreement gives Seagate select elements of Samsung’s hard drive business, including Samsung’s high-capacity M8 hard drives and semiconductors used to make solid-state drives"
Samsung will continue to make SSDs and other products based on its NAND business, but Seagate will gain NAND supplied by Samsung that it needs to launch its own SSD business along with acquiring the entire Samsung HDD business.
This was probably the only way for Seagate to complete the deal. Samsung's NAND business is probably more valuable than the entirety of Seagate.
Storage professional here. Disk drives failure rate is usually 0.5 to 3% a year. Drives do fail, so you can't draw any statistical significant figures from the failure of a couple of drives among a total of four or five (or even ten or twenty).
However my company's selling drives by the thousands, and here's what I can say: Seagate barraccuda are the worst pieces of crap being sold since the infamous IBM 80GB debacle; their failure rate is 10% a year, no less. Unsurprisingly Seagate just dropped their warranty to ... 1 year! Keep away from these at all costs...
Seagate Constellation seem to be OK but I only have a few of these.
Hitachi 1, 2 and 3 TB look impressive: 1 failure among 2 thousand drives, in 2 years.
WD seem OK, but I haven't nearly enough of them to get significant numbers (a couple hundreds).
Unfortunately, I recently picked up a couple of Barracuda because of a price break fluke that let me essentially escape the flooding price inflation.
I guess I will use them with trepidation (redundant backups, mostly sitting on a shelf) and plan to phase them out in the coming year and/or into transient cache.
Thanks for the heads up.
P.S. I was set to go with Hitachi (2 TB 7200 RPM) when their prices more than doubled on me. Price aside, are they still a good bet like they were a couple of years ago? (I recall reading that at one point Google was favoring them.)
Also, since I'm adding a postscript, does anyone recall the HD failure rate study that someone put out a few years ago? Of course, things change, but behind the particular models in seem to recall some useful inferences about company/brand quality/reliability.
I may be remembering the Google study and/or something else from about that time frame. I have a vague recollection now of both Google's opinion and and something else that had at least some degree of separation from Google.
Thanks very much for the informative response. I'll have a look at these (as soon as I talk myself down sufficiently from my guilt over my price-motivated Seagate purchase ;-).
In part, I also pushed the button on Seagate (despite the 1 TB "click of death" episode from a few years ago) because a recent WD laptop HD purchase went rather bad with incessant parking that is apparently inherent to the model's firmware. I finally fixed that on the XP Pro machine it lives in by finding and setting to run on start-up:
Unfortunately I didn't set up as many of these, but the first generation of SLC SSD were quite prone to failure;
The latest SSD with Sanforce 12xx controllers seem to work very well. I had no failure on these yet, though I had some trouble with older designs.
Agreed. Two of my latest Seagate purchases died while I was very satisfied with Samsung. It might be worse though, buying a Samsung drive, should one expect Seagate or Samsung quality in the future?
As the largest flash vendor, Samsung may win no matter which controllers are used. Seagate has no consumer SSDs so I can understand why they want to buy that business from Samsung.
Ah, the good 'ol iPhone bundling tactic. I'm definitely not an opponent of sticking to what you're good at, and doing it best. And with this deal, I guess that's what's happening with both companies!
In the short term this is good for Seagate. In the long term though, I think this is good for Samsung. More and more of our memory needs are being met by online storage.
Sure we'll need NAND going into the future. But are we going to need it in the quantities that we currently demand when cloud storage is becoming more and more popular?
