netrashetty
Netra Shetty
Western Digital Corporation (NYSE: WDC) (often abbreviated to WD) is the second largest computer hard disk drive manufacturer in the world, after Seagate[2] and has a long history in the electronics industry as an integrated circuit maker and a storage products company. Western Digital was founded on April 23, 1970 by Alvin B. Phillips, a Motorola employee, as General Digital, initially (and briefly) a manufacturer of MOS test equipment. It rapidly became a speciality semiconductor maker, with start-up capital provided by several individual investors and industrial giant Emerson Electric Company. Around July 1971 it adopted its current name and soon introduced its first product, the WD1402A UART.
Western Digital (NYSE: WDC) is a vertically integrated manufacturer of hard drives. Western Digitals main competitors are Seagate (STX) and Hitachi Global Storage (private company whole owned by Hitachi), all three are now about the same size in term of market share. The company produces drives for use in desktops, mobile devices, enterprise, and consumer electronics, and sells components to original equipment manufacturers (OEMs).
As the hard drive industry is fairly commoditized, intense competition from its competitors is ordinary. Competitors are Seagate and Hitachi Global Storage and the non-vertically integrated manufacturers: Samsung, Toshiba (TOSBF), and Fujitsu (FJTSY, who produce complete hard drive units but do not internally produce all main components (head, disc, gimbal assembly and channel decoder). These non-vertical integrated companies also have other products which they can use to offset a loss in their hard drive devisions.
Another source of competition comes from advances in solid state devices (SSDs) containing flash memory threaten WDC's core product offerings, because SSDs have many advantages over traditional hard drives, especially in mobile applications. However, in the third quarter of 2009 WDC acquired SiliconSystems, Inc, thereby entering the solid state harddrive market.[1]
In the second quarter of 2009, WDC began to design, develop, manufacture and sell media players. A media player is a device that connects to a user’s television or home theater system and plays digital movies, music and photos from any of our WD®-branded external hard drives or other USB mass storage devices.[1]
Contents
1 Company Overview
1.1 Business Financials
1.2 Business Segments
1.2.1 Desktop hard drives
1.2.2 Mobile hard drives
1.2.3 Enterprise hard drives
1.2.4 Consumer electronics
2 Trends and Forces
2.1 Flash memory
2.2 Perpendicular recording
2.3 Commoditization of PCs
3 Comparison to Competitors
4 References
Company Overview
Western Digital's business has more than doubled in the past five years due to the growing demand for desktop drives, greater market share, and strong growth in other hard drive products, especially in the mobile and consumer electronics markets. The company has invested an increasingly greater percentage of its revenue in capital and research and development expenses. New product development is necessary to gain a foothold in new markets and to outpace the threat of competing flash memory.
Business Financials
In 2009, WDC earned a total of $7.5 billion in total revenues. This was a decline from its 2008 total revenues of $8.1 billion. This had a negative impact on WDC's net income. Between 2008 and 2009, WDC's net income declined from $867 million in 2008 to $470 million in 2009.
Business Segments
Desktop hard drives
Western Digital's Caviar desktop hard drives are in the 3.5" form factor, range from 36 GB to 500 GB in storage capacity.
Mobile hard drives
Notebook hard drives are in the 2.5" form factor. Western Digital's Scorpio notebook drives range from 40 GB to 160 GB in storage capacity. The 160 GB drive is the company's newest mobile offering, and uses perpendicular recording technology.
Enterprise hard drives
Applications such as databases and e-commerce require especially high performance and reliable hard drives. Western Digital's Raptor enterprise-class drives rotate at a faster speed than consumer hard drives, allowing for faster data access. The company also offers a WD Caviar RE line with enhanced reliability features.
Consumer electronics
Western Digital offers hard drives designed for use in consumer electronics such as digital video recorders (DVR), karaoke systems, and gaming systems, which require quiet operation, low temperature and power consumption, and high reliability.
Trends and Forces
Flash memory
Advances in flash memory technology and growing sales have put pressure on the hard drive market. Unlike hard drives, flash memory are solid state, so they contain no moving mechanical parts, use less power, are smaller and less likely to break. These advantages make flash memory very attractive for use in portable devices such as digital music players (including the ubiquitous iPod) and digital cameras. Flash memory has not replaced hard drives because cost is higher, transfer speeds are slower, and there is a limit of approximately 100,000 read/write operations. However, each of these limitations are being gradually overcome with technological advances.
The next advance for flash memory would be to replace hard drives in hard drive-based digital music players and laptops. Flash memory makers such as SanDisk would have the most to gain from adoption of the new technology, while hard drive manufacturers such as Western Digital and Seagate would have the most to lose. Diversified companies like Samsung would be less affected, because they manufacture both types of storage or other types of products. Samsung and SanDisk have both announced or released solid state disks (SSDs) up to 64 GB, which can effectively compete with smaller sized hard drives. Dell has already began shipping ultra-portable laptops with SSDs. Although hard drives are still the dominant storage device, hard drive manufacturers are wary of the threat of flash memory.
Perpendicular recording
Perpendicular recording is a data recording technology that allows for greater data densities, which leads to greater drive capacities and faster access speeds. Traditionally, bits of digital data are stored as magnetic information on the hard disk platter with the magnetic poles aligned along the plane of the platter. There is a physical limit to how closely data can be packed while maintaining data stability. Perpendicular recording technology overcomes this limit by aligning the poles of magnetic information perpendicular to the platter using a different writing mechanism and recording material with higher magnetic fidelity. Whereas traditional longitudinal recording has an estimated limit of 100 to 200 gigabits per square inch, perpendicular recording allows for densities of up to 1000 gigabits per square inch.
Hard drive manufacturers are expected to adopt the technology rapidly because current data densities are near the physical limit. Competitor Seagate was the first to successfully implement the technology, and is currently shipping 3.5" drives with capacities up to 750 GB. In comparison, Western Digital's largest 3.5" drive, which uses traditional longitudinal recording, has a maximum capacity of 500 GB. The company has already incorporated perpendicular recording in its 160 GB Scorpio drives for laptops, and is likely to announce new products with the technology in the future.
Commoditization of PCs
Over the last few decades, PCs have become an increasingly important part of our daily domestic and work lives. PC's are used for tasks ranging from rudimentary email and word processing to advanced computer programming. Commoditization, in the business world, is a process that transforms the market for a unique, branded product into a market based on undifferentiated price competition. The commoditization of PCs would hurt PC manufacturers and OEM suppliers such as Western Digital, as they face intense competition to lower prices. Western Digital is especially vulnerable because it shipped the majority of hard disks for low- to mid-level computer desktops, which are the markets most likely to be commoditized.
Comparison to Competitors
Western Digital controls 22% of the hard drive market, and its competitors are Seagate, Hitachi, Samsung, Toshiba, and Fujitsu.
The market is divided into "independent" and "captive" manufacturers. Western Digital and Seagate are independent manufacturers, meaning that they are entirely focused on manufacturing hard disk drives. Captive manufacturers Hitachi, Samsung, Toshiba, and Fujitsu are more diversified companies with a hard drive division. Captive competitors may sell hard drives at break even profit or even at a loss when it can bundle drives with other more profitable components, such as computer memory. This makes competition especially intense and sometimes irrational for independent manufacturers like Western Digital.
Due to the similarities in market share and business focus, Seagate and Western Digital are chief rivals in the market. The two companies' offerings cover 97% and 90% of the market respectively. Both companies produce desktop, mobile, enterprise, and consumer electronics products, and sell mainly to OEMs. Thus, many of the same market forces such as seasonal changes in sales and commoditization of PCs affect the two companies in the same ways.
One particularly important rising competitor to hard drives are flash-memory based solid state devices (SSDs). Unlike hard drives, flash memory are solid state, so they contain no moving mechanical parts, use less power, are smaller and less likely to break. These advantages make flash memory very attractive for use in portable devices such as digital music players and cameras. Flash memory has not replaced hard drives because cost is higher, transfer speeds are slower, and there is a limit of approximately 100,000 read/write operations. However, each of these limitations are being gradually overcome with technological advances. Samsung and SanDisk have announced or released SSDs up to 64 GB that have already began to replace hard drives in ultraportable laptops. Although hard drives are still the dominant storage device, SSDs represents an impending threat to Western Digital's business.
Western Digital has been slower than competitors to incorporate perpendicular recording into its products, which allows for greater data capacities and faster access speeds. Currently it has one product with the technology (160 GB Scorpio notebook drive).
Western Digital (NYSE: WDC) is a vertically integrated manufacturer of hard drives. Western Digitals main competitors are Seagate (STX) and Hitachi Global Storage (private company whole owned by Hitachi), all three are now about the same size in term of market share. The company produces drives for use in desktops, mobile devices, enterprise, and consumer electronics, and sells components to original equipment manufacturers (OEMs).
As the hard drive industry is fairly commoditized, intense competition from its competitors is ordinary. Competitors are Seagate and Hitachi Global Storage and the non-vertically integrated manufacturers: Samsung, Toshiba (TOSBF), and Fujitsu (FJTSY, who produce complete hard drive units but do not internally produce all main components (head, disc, gimbal assembly and channel decoder). These non-vertical integrated companies also have other products which they can use to offset a loss in their hard drive devisions.
Another source of competition comes from advances in solid state devices (SSDs) containing flash memory threaten WDC's core product offerings, because SSDs have many advantages over traditional hard drives, especially in mobile applications. However, in the third quarter of 2009 WDC acquired SiliconSystems, Inc, thereby entering the solid state harddrive market.[1]
In the second quarter of 2009, WDC began to design, develop, manufacture and sell media players. A media player is a device that connects to a user’s television or home theater system and plays digital movies, music and photos from any of our WD®-branded external hard drives or other USB mass storage devices.[1]
Contents
1 Company Overview
1.1 Business Financials
1.2 Business Segments
1.2.1 Desktop hard drives
1.2.2 Mobile hard drives
1.2.3 Enterprise hard drives
1.2.4 Consumer electronics
2 Trends and Forces
2.1 Flash memory
2.2 Perpendicular recording
2.3 Commoditization of PCs
3 Comparison to Competitors
4 References
Company Overview
Western Digital's business has more than doubled in the past five years due to the growing demand for desktop drives, greater market share, and strong growth in other hard drive products, especially in the mobile and consumer electronics markets. The company has invested an increasingly greater percentage of its revenue in capital and research and development expenses. New product development is necessary to gain a foothold in new markets and to outpace the threat of competing flash memory.
Business Financials
In 2009, WDC earned a total of $7.5 billion in total revenues. This was a decline from its 2008 total revenues of $8.1 billion. This had a negative impact on WDC's net income. Between 2008 and 2009, WDC's net income declined from $867 million in 2008 to $470 million in 2009.
Business Segments
Desktop hard drives
Western Digital's Caviar desktop hard drives are in the 3.5" form factor, range from 36 GB to 500 GB in storage capacity.
Mobile hard drives
Notebook hard drives are in the 2.5" form factor. Western Digital's Scorpio notebook drives range from 40 GB to 160 GB in storage capacity. The 160 GB drive is the company's newest mobile offering, and uses perpendicular recording technology.
Enterprise hard drives
Applications such as databases and e-commerce require especially high performance and reliable hard drives. Western Digital's Raptor enterprise-class drives rotate at a faster speed than consumer hard drives, allowing for faster data access. The company also offers a WD Caviar RE line with enhanced reliability features.
Consumer electronics
Western Digital offers hard drives designed for use in consumer electronics such as digital video recorders (DVR), karaoke systems, and gaming systems, which require quiet operation, low temperature and power consumption, and high reliability.
Trends and Forces
Flash memory
Advances in flash memory technology and growing sales have put pressure on the hard drive market. Unlike hard drives, flash memory are solid state, so they contain no moving mechanical parts, use less power, are smaller and less likely to break. These advantages make flash memory very attractive for use in portable devices such as digital music players (including the ubiquitous iPod) and digital cameras. Flash memory has not replaced hard drives because cost is higher, transfer speeds are slower, and there is a limit of approximately 100,000 read/write operations. However, each of these limitations are being gradually overcome with technological advances.
The next advance for flash memory would be to replace hard drives in hard drive-based digital music players and laptops. Flash memory makers such as SanDisk would have the most to gain from adoption of the new technology, while hard drive manufacturers such as Western Digital and Seagate would have the most to lose. Diversified companies like Samsung would be less affected, because they manufacture both types of storage or other types of products. Samsung and SanDisk have both announced or released solid state disks (SSDs) up to 64 GB, which can effectively compete with smaller sized hard drives. Dell has already began shipping ultra-portable laptops with SSDs. Although hard drives are still the dominant storage device, hard drive manufacturers are wary of the threat of flash memory.
Perpendicular recording
Perpendicular recording is a data recording technology that allows for greater data densities, which leads to greater drive capacities and faster access speeds. Traditionally, bits of digital data are stored as magnetic information on the hard disk platter with the magnetic poles aligned along the plane of the platter. There is a physical limit to how closely data can be packed while maintaining data stability. Perpendicular recording technology overcomes this limit by aligning the poles of magnetic information perpendicular to the platter using a different writing mechanism and recording material with higher magnetic fidelity. Whereas traditional longitudinal recording has an estimated limit of 100 to 200 gigabits per square inch, perpendicular recording allows for densities of up to 1000 gigabits per square inch.
Hard drive manufacturers are expected to adopt the technology rapidly because current data densities are near the physical limit. Competitor Seagate was the first to successfully implement the technology, and is currently shipping 3.5" drives with capacities up to 750 GB. In comparison, Western Digital's largest 3.5" drive, which uses traditional longitudinal recording, has a maximum capacity of 500 GB. The company has already incorporated perpendicular recording in its 160 GB Scorpio drives for laptops, and is likely to announce new products with the technology in the future.
Commoditization of PCs
Over the last few decades, PCs have become an increasingly important part of our daily domestic and work lives. PC's are used for tasks ranging from rudimentary email and word processing to advanced computer programming. Commoditization, in the business world, is a process that transforms the market for a unique, branded product into a market based on undifferentiated price competition. The commoditization of PCs would hurt PC manufacturers and OEM suppliers such as Western Digital, as they face intense competition to lower prices. Western Digital is especially vulnerable because it shipped the majority of hard disks for low- to mid-level computer desktops, which are the markets most likely to be commoditized.
Comparison to Competitors
Western Digital controls 22% of the hard drive market, and its competitors are Seagate, Hitachi, Samsung, Toshiba, and Fujitsu.
The market is divided into "independent" and "captive" manufacturers. Western Digital and Seagate are independent manufacturers, meaning that they are entirely focused on manufacturing hard disk drives. Captive manufacturers Hitachi, Samsung, Toshiba, and Fujitsu are more diversified companies with a hard drive division. Captive competitors may sell hard drives at break even profit or even at a loss when it can bundle drives with other more profitable components, such as computer memory. This makes competition especially intense and sometimes irrational for independent manufacturers like Western Digital.
Due to the similarities in market share and business focus, Seagate and Western Digital are chief rivals in the market. The two companies' offerings cover 97% and 90% of the market respectively. Both companies produce desktop, mobile, enterprise, and consumer electronics products, and sell mainly to OEMs. Thus, many of the same market forces such as seasonal changes in sales and commoditization of PCs affect the two companies in the same ways.
One particularly important rising competitor to hard drives are flash-memory based solid state devices (SSDs). Unlike hard drives, flash memory are solid state, so they contain no moving mechanical parts, use less power, are smaller and less likely to break. These advantages make flash memory very attractive for use in portable devices such as digital music players and cameras. Flash memory has not replaced hard drives because cost is higher, transfer speeds are slower, and there is a limit of approximately 100,000 read/write operations. However, each of these limitations are being gradually overcome with technological advances. Samsung and SanDisk have announced or released SSDs up to 64 GB that have already began to replace hard drives in ultraportable laptops. Although hard drives are still the dominant storage device, SSDs represents an impending threat to Western Digital's business.
Western Digital has been slower than competitors to incorporate perpendicular recording into its products, which allows for greater data capacities and faster access speeds. Currently it has one product with the technology (160 GB Scorpio notebook drive).
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