Western Digital submerged, gurgling
By Rik Myslewski in San Francisco
Last year’s severe flooding in Thailand may have been human and economic disaster, but if every cloud has a silver lining, that silver has slipped into the pockets of Seagate as it retook the top sales spot among hard drive businesses, unseating Western Digital.
“Seagate owes its return to market leadership to a fortuitous accident in geography,” said IHS storage analyst Fang Zhang in a statement. “Its HDD manufacturing plant in Thailand is located on high ground.”
Seagate’s main competition was not so lucky. “Western Digital’s HDD manufacturing facilities were engulfed by rampaging storm waters,” Fang said, “which effectively slashed its fourth-quarter output to half of the manufacturer’s preflood volume.”
When it released its financial results for the final three months of 2011, Western Digital revealed that it had shipped a mere 28.5 million HDDs in that quarter, just over half of the 52.2 million it had delivered in the same quarter in 2010, and just less than half of the 57.8 it had shipped in the previous quarter.
Seagate, IHS says, endured a much slimmer decline in units sales during that quarter, shipping 46.9 million HDDs, down from 50.8 million in the previous quarter.
As a result, Seagate has regained its spot as el numero uno in HDD unit sales, a ranking it hasn’t held in at least two years, according to IHS. Note, however, that as a manufacturer of higher-margin products than those produced by Western Digital, Seagate is and has been the HDD revenue leader for quite some time.
The HDD industry as a whole took a beating in the final quarter of 2011, IHS reports, with total shipments sinking to 123.3 million units, down from 175.2 million in the third quarter.
If there is any good news to be found in this flood of depressing statistics, it’s that gross margins soared during the supply-constrained months. Seagate’s margins hit 32 per cent, far above what IHS says was the company’s target of 22 to 26 per cent, and Western Digital’s margins hit a new company record of 32.5 per cent.
Average selling prices (ASPs) went stratospheric, as well, with Seagate’s ASP rising from $55 in the third quarter to $68 in the fourth, and Western Digital floating up from from $46 to a rather astonishing $69 in the fourth.
IHS expects that although pre-flood pricing is not expected to return “anytime soon,” the HDD business should begin its return to normalcy at the end of this quarter.
If only that return were as quick and painless for those millions of Thais affected by the murderous floods. ®
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