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HDD Crisis Was Fake: Seagate and Western Digital Post Big Profits

Discussion in 'Storage' started by lyndonguitar, May 3, 2012.

  1. lyndonguitar

    lyndonguitar I play games

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    this true? :wtf:

    Hard drive manufacturers Seagate Technology and Western Digital have reported great financial results after such a prolonged hard disk drive “crisis.”

    There was always talk about the fact that hard disk drives are so cheap, that the profitability of the manufacturers is getting low enough to limit the R&D investments they would otherwise make.

    Many industry insiders were talking about overstocking and lowering profits. The situation was bleak.


    One year ago, Samsung wanted to get rid of their HDD division, despite the fact that the products developed there were quite good. The F1 and F3 lines of desktop HDD are very good performers to this day, and they’ve been since way back in 2008.

    Seagate jumped at the opportunity and snatched Samsung’s hard drive division for almost 2 billion dollars, back in April 2011.

    Hitachi was also doing quite alright. They had good mobile HDDs and the very successful 1000.C hard disk drive line that excelled when dealing with multi-threaded work. Still, the marketplace for HDDs was so difficult that they’ve announced they’ll be selling their hard drive division to Western Digital.

    The Thailand flood came and went and we were left with the hard drive “crisis”. While the hard drives were almost never “out of stock” the prices increased even by 300%.

    Months passed by, but there seemed to be no end to the hard drive crisis, despite the fact that both manufacturers were announcing the restoration of the plants affected by the waters.

    In a report from earlier his year, we found out that Seagate even managed to increase its HDD shipments with around 2% when compared to the previous year. Where exactly was that “crisis?”

    Now Seagate proudly announces it has decided to spend 2.5 billion dollars to repurchase a considerable amount of its outstanding ordinary shares. Spending 2.5 billion dollars less than a year after buying Samsung’s HDD division for another 2 billion doesn’t really seem like a company “suffering” from a “crisis.”

    Western Digital, too, has just announced its fiscal third quarter financial results. Despite recently acquiring HGST (that’s Hitachi’s HDD division) in March last year and also “suffering” from a “difficult crisis,” they’ve made a net income of 146 million dollars, or 62 cents per share.

    "Our third quarter performance demonstrates the potential of the new Western Digital, with just three and a half weeks of HGST results combined with the standalone WD business," said John Coyne, CEO of Western Digital.

    By their reasoning: bad market plus low margins plus the HDD crisis equals big profits.

    Good job if we may say. We finally have a humongous duopoly in the hard drive market too. This is probably the most desirable situation for the end-users paying 300% more money for last year's technology.

    We shall now wait and see when the prices go back to where they were one year ago, if ever. :shadedshu
     
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  2. Capitan Harlock

    Capitan Harlock

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    this news is not a surprise but first you have to know than banks give money to everyone,if they have to make a good profit from togheter, banks and big lobby xd , its the same with this "crisis" , for me the only Crysis is the game not this global theater create from banks and other no-human people without respect for the others
     
  3. NC37

    NC37

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    You are surprised by this?

    When the big oil spills hit and everyone freaked, what happened the following year? Record profits and people screaming for the blood of their CEOs. Natural disaster is just another way for companies to say..."Ooo we can gouge now!!"
     
  4. Chevalr1c

    Chevalr1c

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    I think it might be (and I am but speculating now) that the manufacturers with want to speed-up the transfer process from magnetic spin-around storage towards solid state drives.
     
    Last edited: May 3, 2012
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  5. TheMailMan78

    TheMailMan78 Big Member

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    So a company with high demand and short supply reports record profit in the quarters of short supply and its a conspiracy? You people need to take some economics classes.
     
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  6. AthlonX2

    AthlonX2 HyperVtX™

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    Indeed!!!!
     
  7. Capitan Harlock

    Capitan Harlock

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    economics classes= billions of words for tell you i grab all your money when i whant , conspiracy is everywhere and usa is the top class of this shit , use your real mind not the mind in another spot
     
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  8. Artas1984

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    I was glad that HDD got more expensive when crysis hit, their prices were getting ridiculously low compared to the rest of components and SSD prices were ridiculously high.. When HDD crysis hit, at least buying an SSD seemed very reasonable - before it was just absurd to buy SSD.
     
  9. Frick

    Frick Fishfaced Nincompoop

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    I... Wow. Just wow.
     
  10. Sasqui

    Sasqui

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    LOLz, too true, look at the record profits of Exxon and BP! Supply and demand driving prices... supply can be real and it can be manipulated.

    Remember the memory crisis and prices of DRAM in the 90's?
     
  11. TheMailMan78

    TheMailMan78 Big Member

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    The US is to blame for a "conspiracy" to price fix from companies mfg. plants located in south east Asia? Even for a conspiracy that sounds stupid. I guess Bush caused the tidal wave also with our vast navy of capitalist McDonald themed battle cruisers equipped with magical wave makers. Just so YOU would have to pay more for a HD.
     
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  12. Kreij

    Kreij Senior Monkey Moderator Staff Member

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    I didn't know we had McDonald themed cruisers.
    I knew about the Starbucks themed M1A1s, but this is cool.
    Learn something new every day.
    Can you whip up a pshop of one of those, TMM?
     
  13. lilhasselhoffer

    lilhasselhoffer

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    Ahem, I never thought I'd be saying this. The MailMan is entirely correct in this.


    WHAT?!?

    To those who see a conspiracy, perhaps you should dislodge yourself from the anti-capitalism conspiracy.



    To recap, economics of supply and demand are simple. If you have no expenditures on resources, but an inventory that is constantly increasing in value, then your profit margins increase. You increase the cost to consumers to prevent casual buyers from completely depleting reserves, so that critical applications still have access to the supply. So less manufacturing costs and higher sales prices led to higher profits for HDD manufacturers. Where is the rocket science?

    BP caused an oil spill, which was supposed to be planned for. The US government (my government) required BP to have a plan in case of failure, which was a near photocopied version of an arctic drilling plan (including measures to save the seals... in the Gulf of Mexico?). The US government failed to make sure the "plan" by BP was adequate. Subsequently, Bush era arctic drilling permission has made the US an oil exporter. We export oil, and pay for it through the nose, because supply and demand is being followed (Middle eastern embargoes are making exporting oil very profitable).


    Economics is simple, and nobody is trying to screw you. If you want low prices then enjoy what Wallmart brings. Otherwise, profit exists where demand is high and supply is low. To attach a conspiracy to this is an insult to simple logic, and is sad to say the least.
     
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  14. Capitan Harlock

    Capitan Harlock

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    its an exsample bring the us for talk about conspiracy, i dont have accuse the us for the price of hd but make a good search an look about the group bilderberg and see how much of them are american the majority , look how much money the pentagon spend for give petrol for tanks and low the money for the istruction , please use your mind really, i live in italy and here we have a lots lots of problems like all the country in europe but much much bigger , us is the top like england for money problems and its all real thing ,if in south asia they make good profit without give motivation about how they become riccher with the problems its a conspiracy xd, i dont think you accuse a thief for nothing , but with prove
     
  15. TheMailMan78

    TheMailMan78 Big Member

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    I can honestly say I have no clue what you just said. However I did see you mention the "Bilderberg Group" which made me lol.
     
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  16. newtekie1

    newtekie1 Semi-Retired Folder

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    Is big profits really a surprise? It isn't hard to understand why you get more profit when there is a shortage.

    1.) WD and Seagate didn't have to pay to employ the workers in the factories that got shut down. Basically a hassle free layoff.
    2.) The shortage allowed them to raise the price on the drives they were manufacturing and selling. The cost per drive to them stayed the same, but the price they sold them for was doubled. So their profit per drive was more than doubled.
    3.) Demand was not all that affected by the higher prices. So while the number of units sold was only slightly down, the profit per unit was greatly increased.
     
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  17. Chevalr1c

    Chevalr1c

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    Thanks for the refreshment course in economics guys. I feel stupid now. :(
     
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  18. TheMailMan78

    TheMailMan78 Big Member

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    lol Don't feel bad man. Thats what forums are for. Gotta take the dumb with the smart. Only way to learn IMO. newtekie1 said the same thing I did.....just more gracefully.

    Record profits should have been EXPECTED during a crisis like this. If they reported a loss then people would be screaming for an investigation. Stock holders would have been PISSED.
     
  19. babash*t

    babash*t New Member

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    Why am I reading economics on a tech site...
     
  20. TheMailMan78

    TheMailMan78 Big Member

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    Because you live in Kenya.
     
  21. Kreij

    Kreij Senior Monkey Moderator Staff Member

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    Why? I think you made a very valid point about SSD adoption.
    The companies that are producing SSDs want to see as them supplant traditional hard drives.
    This is obviously a factor for the HDD companies as they must compete with their products in the same overall market. While artificial price increases are not out of the question (and have nothing to do with supply/demand profit scenarios), they still have to keep their market segment happy or they run the risk of losing it to the competition.
     
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  22. babash*t

    babash*t New Member

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    Hehehehe, funny :-|
     
  23. Chevalr1c

    Chevalr1c

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    Well, I should have expected the profits, as stated before by Newtekie and TMM. And indeed, too much price increases for HDDs will push users towards SSDs but the latter have a worse price/dollar ratio so that will not happen that much yet I think.
     
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  24. Arctucas

    Arctucas

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    I am glad I had a half dozen spare HDDs just lying around...
     
  25. qubit

    qubit Overclocked quantum bit

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    What, they milked the situation? Never! :rolleyes:

    It's good to see it quantified. Thing is, there was a genuine crisis under all that: people died and factories were wrecked. However, they recovered much faster than they were letting on and they raked in the profits. Typical, really.
     

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