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With Hitachi buy, Western Digital moves further ahead of rivals

Lucas Mearian | March 7, 2011
Hitachi GST moves puts WD on top for the foreseeable future

For example, Hitachi GST's CEO, Steve Milligan, will join Western Digital as president, reporting to its CEO John Coyne.

Though solid-state drives (SSDs) are likely to dominate the market in the years ahead, HDDs aren't going away anytime soon, said Reinsel. "This acquisition should keep WD in the pole position for a very long time," he said.

"WD has never fumbled an acquisition that I can remember, and they've done plenty. I would look for them to be successful with this one as well," Reinsel added.

Shattuck sees numerous synergies between the two companies.

"They offer us tremendous scale," he said. "In this industry that's increasingly commoditized, scale helps us enhance our leadership with respect to cost. And, by combining our [intellectual property], we can achieve product expansion at a faster pace."

But Shattuck also acknowledged a good deal of overlap, particularly in the consumer HDD space. He would not say whether that would result in product consolidation or personnel layoffs. "It's too early to comment on that," he said.

Babineau said it is important to remember that mergers like this are much more complicated than most basic technology deals because the product overlap is almost 100%, "which requires a significant level of rationalization across manufacturing lines, supply chains, and product roadmaps, amongst others.

"This particular deal will likely face the same hurdles, but over the long term it is a very smart move because success in the disk drive business is measured by scale," he said.

 

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