Western Digital overtakes Seagate in hard drive shipments

Western Digital shipped the most hard disk drives (HDD) of any storage supplier, surpassing long-term number one Seagate Technology for the first time ever on a quarterly basis, according to iSuppli.

Western Digital shipped a record 51.1 million HDDs during the period, up 3.2 per cent from 49.5 million in the fourth quarter of 2009. In comparison, Seagate’s HDD shipments amounted to 50.3 million units in the first quarter of 2010, up 0.8 per cent from 49.9 million during the previous quarter.
Although Western Digital succeeded in finally ending the long-running perch at the top for its rival in terms of shipments, Seagate continued to lead on the revenue front at $3.1bn, compared to Western Digital’s $2.64bn, iSuppli data show.

“Despite a second-place finish in shipment levels, Seagate’s larger revenue total is attributed to its serving the high-end enterprise sector, which garners larger financial returns,” said Fang Zhang, analyst for storage systems at iSuppli. “In comparison, Western Digital employed a lower-cost business model that translated into reduced Average Selling Prices (ASP) and less revenue—but higher unit shipments.”

Rounding out the Top 5 in HDD shipments for the first quarter of 2010 were Hitachi Global Storage Technologies in third place, Toshiba/Fujitsu in fourth and Samsung Electronics in fifth. All three companies retained their rankings from the previous quarter. However, while Hitachi showed the strongest quarter-over-quarter growth among the Top 5, up 13.9 per cent during the period, both Toshiba/Fujitsu and Samsung registered shipment declines.

“Despite the switch in the shipment rankings, the head-to-head competition between the two giants will continue, and Seagate will experience pressure from Western Digital in the battle for the top market position in the future,” Zhang said. “While the low-cost model might cost Western Digital some revenue, that same approach will be the company’s point of leverage in its quest to pick up more business so that it can undermine Seagate, iSuppli believes.

“Which company will take—or keep—the number-one position in the future will depend on a number of critical factors, including product competitiveness in the market, new product offerings, success in maintaining existing business while being able to penetrate new markets and capability to control demand and supply without jeopardising or losing potential opportunities.

In the meantime, both Seagate and Western Digital continue to operate under tight capacity, with the situation easing somewhat in the second quarter due to slight seasonal declines in overall shipments.”

Furthermore, various HDD companies have stated their plans to increase capital spending this year, iSuppli has learned. Western Digital said it will spend $1.2bn during the next five years on its plants in Malaysia—a figure considerably higher than the $650m to $750m in general that the company had allotted in 2010. Likewise, increased capital expenditures have been announced by the likes of Toshiba, Samsung Electronics and Hitachi Because of the augmented capital expenditures from HDD manufacturers, the industry can be expected to maintain a balance between supply and demand in 2010, iSuppli anticipates.

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