Friday, September 20th 2019

Western Digital Announces Sale of IntelliFlash Business and Intention to Exit Storage Systems

Western Digital Corp. today announced that it has entered into a definitive agreement to sell its IntelliFlash business to DDN, a global leader in artificial intelligence (AI) and multi-cloud data management. In addition, Western Digital and DDN have agreed to expand their existing partnership through a multi-year strategic sourcing agreement, under which DDN will increase its purchase of Western Digital's HDD and SSD storage devices.

This announcement is part of Western Digital's strategic intention to exit Storage Systems, which consists of the IntelliFlash and ActiveScale businesses. The company is exploring strategic options for ActiveScale. These actions will allow Western Digital to optimize its Data Center Systems portfolio around its core Storage Platforms business, which includes the OpenFlex platform and fabric-attached storage technologies.

"As we look to the future, scaling and accelerating growth opportunities for IntelliFlash and ActiveScale will require additional management focus and investment to ensure long-term success," said Mike Cordano, president and chief operating officer. "By refocusing our Data Center Systems resources on our Storage Platforms business, we are confident that the Western Digital portfolio will be better positioned to capture significant opportunities ahead and drive long-term value creation."

"DDN has deep technical expertise and capabilities in high performance and at scale data environments, and is well positioned to build on and accelerate the success of the business," said Phil Bullinger, senior vice president & general manager of the Data Center Systems business. "Importantly, both Western Digital and DDN are aligned in our commitment to executing a smooth transition for all stakeholders. Western Digital will remain one of the largest consumers of IntelliFlash products, and customers will continue to receive best-in-class service and support."

The transaction is expected to close later this calendar year, subject to the satisfaction of customary closing conditions. Financial terms of the transaction were not disclosed. Western Digital's intended exit of Storage Systems is expected to generate an annual non-GAAP EPS benefit of at least $0.20 starting in the fiscal 2020 third quarter ending April 3, 2020. The Company will also incur restructuring and other charges, which are not determinable at this time.
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3 Comments on Western Digital Announces Sale of IntelliFlash Business and Intention to Exit Storage Systems

#1
Phuncz
EDIT: apparently they aren't selling their storage devices "production facilities and IP", they are increasing the sale of storage devices to DDN along with the appliances. OK makes more sense. Thx @gsvelto and @kapone32

Original: If Western Digital is exiting storage, they're basically selling off their entire IP. Focusing on data center is all well and good as a plan for the future but you can't build storage without storage devices. So I guess the biggest conclusion I can make is they don't want to be a storage device supplier but a storage appliance supplier. My guess is they won't serve the consumer market anymore and somehow feel the empire they've built is worth less than building a new one from basically scratch for the enterprise market which is hard to get a foot in between the door.

I guess they feel the SSD market is too crowded and the HDD market has seen it's best days.
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#2
gsvelto
Phuncz
If Western Digital is exiting storage, they're basically selling off their entire IP. Focusing on data center is all well and good as a plan for the future but you can't build storage without storage devices. So I guess the biggest conclusion I can make is they don't want to be a storage device supplier but a storage appliance supplier. My guess is they won't serve the consumer market anymore and somehow feel the empire they've built is worth less than building a new one from basically scratch for the enterprise market which is hard to get a foot in between the door.

I guess they feel the SSD market is too crowded and the HDD market has seen it's best days.
Since ActiveScale and IntelliFlash are storage appliances it seems that they're exiting the storage appliance market, not the storage device market.
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#3
kapone32
I do believe it is just there technologies and not consumer hardware they are letting go of. Not just that but getting an uptick in sales as well with the agreement for DDN to use their products. I still thin they are a little delusional in the consumer market as their drives are usually more expensive than variants form other storage vendors. I do not see them exiting the HDD market either as they have recently announced 14 TB consumer HDDs.
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