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Ella Lee

Seagate Technology is aiming for a turnaround in the difficult storage hardware market by continuing its strong position in high-end hard disk drives for servers and workstations while rolling out low-cost drives to address the exploding sub-US$1,000 PC market.

 Seagate had made good progress in the 'firming' high-end market, US investment bank Salomon Smith Barney said.

 Servers not only offered higher profit margins but a stable growth rate - an expected 24 per cent growth in unit shipments this year over last, compared with 21 per cent growth previously.

 Seagate, which also makes storage software, has been able to maintain a foothold in the high-end drive market with its Cheetah and Barracuda series.

 The Cheetah is the fastest drive on the market, with rotation speed of 10,000 rpm.

 Seagate also is a leader in fibre-channel drives, which transfer data much faster than current mainstream drives using Ultra ATA controllers.

 As much as Seagate might like to, it cannot abandon the desktop market. PC sales growth is slowing - 11.8 per cent this year over last, compared with 15.2 per cent the year before, technology consultancy IDC said.

 But the high-end market remains small, only accounting for 14 per cent of total drive shipments, according to Trendfocus. Desktops take the biggest share of the pie - 74 per cent - with the remaining 12 per cent going to portables.

 Salomon said Seagate's position in the desktop market remained troubled, especially as price pressure intensified.

 The Medalist ST32111 is the company's first hard drive aimed at the low-cost market for cheap PCs and TV set-top boxes. They come with 2-4 Gb storage, 13 milliseconds seek time and 4,500 rpm rotation speed.

 The 29 million disk drives the company shipped in this financial year split evenly between high-end and desktop models, Seagate's sales and marketing vice-president in Asia, Don Kennedy, said.

 That was one million less than in the previous year - the first time Seagate reported a downturn since 1984. It lost US$530 million, as revenue dropped 23.7 per cent, from $8.94 billion to $6.82 billion.

 'The past year has been a difficult year for the entire storage industry,' Mr Kennedy said.

 All major disk-drive makers have been hit hard by the industry decline, a result of sluggish computer sales, oversupply, and intense competition especially in pricing.

 The economic slump has worsened the situation. Salomon said the drive industry had already hit bottom and was starting to recover.

 It forecast 145.6 million hard drives would be shipped this year, up 12.3 per cent from last year's 129.7 million.

 That would be little more than half the growth rate of the previous year.

 In terms of revenue, growth is forecast to be 2.1 per cent.

 Although the top three players - Seagate, Quantum and Western Digital - still dominate the market with a combined market share of more than 50 per cent, they are losing share to second-tier players.

 Newcomers such as Fujitsu and Samsung were competitors with strong backgrounds, while Maxtor 'has been very good in execution and time-to-market', Mr Kennedy said.

 Disk giants not only were challenged by the industry decline, they also faced the threat of newcomers.

 Seagate went through a global realignment in January to cut costs, laying off 10 per cent of staff, closing manufacturing plants and design centres, and downsizing the worldwide sales, marketing and administration operation. It has also tried to improve manufacturing efficiency and time-to-market.



Seagate adds low-end drive range