A fortuitous move in a boom-and-bust tech business

Wall Street Journal: Seagate Technology has agreed to pay $1.9 billion in stock to buy rival Maxtor Corp. The transaction unites two of the biggest makers of computer disk drives, a boom-and-bust business in which Seagate has long played the role of consolidator.

I’ve bought and installed quite a few hard drives in my time. In nearly every case, I’ve always bought Maxtor drives as I’ve always felt they were the best brand. Better than Seagate, better than Western Digital, better than any other.

No real evidence to prove they were the best, purely perception and then experience with the brand.

Anyway, as the Journal says, hardware is boom and bust, a commodity business today, and the marketplace is a tough one:

[…] Disk drives are in heavy demand to store data in computers and a growing array of consumer products. But competition is fierce, forcing manufacturers to keep boosting the storage capacities of their products while driving down prices.

By acquiring Maxtor, Seagate hopes to drive a larger volume of products through its network of factories, boosting the utilization of those plants and increasing profit margins. The deal is expected to boost Seagate’s earnings per share on a cash basis after the first full year of combined operations, they said, though Seagate may not retain all the revenue Maxtor now generates.

A tougher market still for traditional drive manufacturing with flash-based storage gaining market traction. So Seagate’s acquisition could be fortuitous, says Business Week. Or maybe not if a differently-focused market assessment from Forbes is any guide.

I think BW has it right.

2 thoughts on “A fortuitous move in a boom-and-bust tech business

  1. You are very fortunate. I have had no good experiences with Maxtor the drives or the company. The external hard drive I used to back up my critical information is a paperweight now. They sold a lot of those to a lot of very unhappy people.
    The internal Maxtor drive I installed grinds every time it’s accessed. I hold my breath and back up religiously to a Western Digital.
    When I sent in for a rebate from Maxtor, they sent me a link so that I could track the progress. I checked on it twice. They then tried to refuse to give me the rebate because they said I had submitted it twice – by clicking on the link.
    The Seagate move is excellent news from my point of view, especially if Maxtor goes away.

  2. That’s an unfortunate experience, Pamela.
    I’ve just bought my first WD drive, an external USB2 hard drive that I’ll be using for backup. Heard good things about this particular drive. So we’ll see how my perception of WD develops based on this experience.

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