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|Subject: Re: OT: Which FKA Would You Choose?||Date: 11/20/2012 7:58 AM|
|Author: mungofitch||Number: 12908 of 15030|
It seems all bits of storage are not created equal. With the
expansion coming from the enterprise sector and Seagate
predominantly in retail, is it really clear they can keep making
the proportional share of profits from the switch?
Seagate is traditionally the leader in enterprise.
It's this expertise that let them crush most of the minor competitors, who
simply didn't understand the reliability chain needed for that market.
Only recently have they given up the lead to WD because of WD's purchase
of the Hitachi unit. It's not as if Seagate doesn't know how to sell there.
Before the WD/Hitachi deal 1% of WD drives went to enterprise clients,
27% of Hitachi's drives, and 65% of Seagate's drives.
Further muddying the market share waters, Seagate bought Samsung's drive unit.
Overall, the two are relatively neck and neck in enterprise these days,
with WD in a moderate lead and Seagate attempting a claw-back.
Whether that works this year will depend on how well the Consellation
series is received, but in any case it's not as if they're an also-ran.
More like a highly competitive duopoly.
As for the argument the Dell fellow is making—
It's true that the supplier closer to the client often gets a better
shot at the value added for the whole chain. But so what?
Porsche might make the most margin on a car, but Bosch might be just
as good or better investment from what they make on supplied components.
Bigger issues are the returns on capital employed and the longevity
of the business model, not who gets the biggest share of wallet.
As an aside, the rule of thumb isn't particularly reliable either.
Often the component makers have very much better business economics.
Intel does better than HP on a PC sold, Boeing does better than Delta.
In hard drives, I'll bet Seagate makes way more from the drives in
Amazon's data centres than Amazon does.
Plus, of course, following his reasoning the consumer HDD market
should have higher margins than enterprise, but the reverse is true.
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