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Samsung elegantly skips out disk - making a partner of Seagate for Flash

There is a saying in Chess – Monkey see check, monkey do check

By PETER WHITE

Published: 21 April, 2011

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There is a saying in Chess – Monkey see check, monkey do check. We were tempted to classify the deal announced this week between Seagate and Samsung as such a case. Putting someone in check in chess doesn’t win you the game, unless they have no way out of it, but in this case both moves – Seagate and Samsung, and the one a few weeks back between Western Digital and Hitachi GST are closer to being sacrifices.

Put yourself in Samsung’s position. You are a global leader in Flash memory, and it’s a tough ride. You need all the cash you can get to stay in pole position, but this is a landgrab for a technology that is going to be the dominant storage technology of our generation. It turns out that you have a considerable holding in the technology – rotating disk drives – that drove the previous round of storage technology and what a round it was.

Since the invention of the Winchester Disk drive back in 1973, it has been a helter-skelter ride to own the intellectual property behind disk drive technology, and just as important to have both market and mind share. Western Digital and Seagate have been in the business for most of that time, and can’t help but need to maintain their momentum as number one and two in disk drives for as long as we can remember.

Western Digital came to disks out of storage controllers for mainframe drives back in the 1980s while Seagate began as Shugart in 1978. Both companies tend to sue just about anybody when they enter the disk drive market for the first time. We remember Cornice (RIP) which in the early parts of this decade tried to put 1 inch disk drives into handsets. Actually Samsung was involved in that one too, and used the product in one phone, before Flash swept past it and took that market lock stock and barrel. The legal actions over intellectual property brought by Seagate did Cornice no favors at the time.

Back then Samsung itself was working on a 0.85 inch disk drive for phones, as were others, including Seagate eventually. But in the end, Flash memory, which is lighter and uses less power than disk drives, stole the handset market.

There are still a lot of storage revenues to be had in disk drives mostly in enterprise IT, but all the smart money on consumer devices is on flash memory, so when Western Digital decided to shell out $4.3 billion to buy Hitachi Global Storage Technologies, it was really about self-preservation in a declining market. The same unit was sold by IBM to Hitachi back in 2003 for just over $2 billion.

We said that the time that the sale by IBM was about video and multimedia and ways to store it on portable devices. Initially Hitachi stole away the early iPod deal from fierce rival Toshiba, which made the original 1.8 inch disk drives in the very earliest iPods. Hitachi provided a 1 inch drive to Apple back in 2004.

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