Samsung Sold its Hard Drive Business to Seagate for $1.4 Billion | Hacker News Reader

Samsung Sold its Hard Drive Business to Seagate for $1.4 Billion

bits.blogs.nytimes.com

143 pointsask99568 comments

WD and Seagate now make 87% of all disk drives. Unsurprisingly, they just slashed warranty on various drives down from 5 to 3 years, and even down to only 1 or 2 years for some models. Oligopoly will suck for us consumers.

True, only if the WD HGST merger goes through.

The UE authorized the merger, AFAIK they're only waiting for the Chinese green light.

EU approval is only conditional. US SEC and China are still pending. Cannot comment on the chances of it going through.

I work at HGST.

$1.4 billion, mates. $1.4 billion for a business with manufacturing plants, complicated global logistics... Now let me remind you that Facebook is valued 85 (!) times more.. o_O

Stock market valuations are almost useless... unless you work with stocks.

If Facebook disappeared tomorrow, nothing of value would be lost and another web site would take its place.

Not really, what disappears is the Facebook "potential" to make money, and the valuation is done thinking at this possibility. Now if you look at it in this way, billions of people using Facebook can be monetized probably much better in the long run compared to selling a new HD from time to time to millions.

What amazes me is that people actually think this is the right way to look at things...

Its the market...

What's the market? The way people look at things. ....

Meh. It's an opt-in system.

If somebody is more concerned with something else there's nobody forcing them to focus on making money.

Actually, it's not purely opt-in. Remember when our tax money "rescued" the banks because of their reckless lending/investments less than two years ago?

Ouch. Valid point.

That potential will be translated in quarter results sooner or later. I think the gap expressed in potential and real stock value between customizers who use your product and non paying users who consume your product is too big nowadays and will be narrowed abruptly.

"""billions of people using Facebook can be monetized probably much better in the long run compared to selling a new HD from time to time to millions."""

As if this has worked well in the past for other hyper-valued web crap...

(Which reminds me, anybody remembers that ole VA Linux company? Where are they now?)

Long story short: http://en.wikipedia.org/wiki/Geeknet

VA Linux is now Geeknet and is basically ThinkGeek and a few other minor properties (/., sourceforge, freecode). They've shed all of their other business lines, hardware, consulting, Animation Factory, etc.

Virtually all of their business news for years has been ThinkGeek related (which is doing pretty awesome), and various corporate level failings such that all of their other properties have always been a drag on the company, frequently throwing it into the red despite having an extremely profitable e-commerce division.

A company that makes really crappy disk drives. I've RMA'd so many of the newer Samsung's I've lost count. At this point, certain models fail so much that I toss them when they fail, and I only ever use them in mirrored arrays (with other non-Samsung's!).

> Now let me remind you that Facebook is valued 85 (!) times more.

They aced the swimsuit competition in the Keynesian beauty contest. http://en.wikipedia.org/wiki/Keynesian_beauty_contest#Overvi...

... until the next babe comes along.

Facebook is the largest seller of online display advertising in the world (bigger than Google), and they've still got a relatively immature advertising platform.

Hard drives are also commodities, which means they sell near cost. If Samsung charges $10 more, people buy from another maker. Facebook is almost the exact opposite: its userbase means that, right now, there is no homologous replacement (including Google+, because they don't have the users).

Which doesn't mean FB is "worth" what it's worth—to me it seems overvalued, but then again no one is holding a gun to my head and forcing me to buy its stock. The nice thing about markets is that we can bet with our money, or not.

On the other hand, online user bases are notoriously mercurial. Facebook's valuation implies an assumption that Facebook won't fall victim to the forces that have claimed every social site to come before it.

That's a pretty gutsy assumption, considering Facebook could plausibly be seriously damaged by something as simple as kids deciding they don't want to hang out at the same place their parents do.

You do realize you could say the same thing about pretty much every company in existence. No-one ever stays on top forever, it's a question of how long you can stay on top for and how much profit you can generate over that period.

Further problems with the hard drive market:

1) SSDs are taking over the market, and that favors flash suppliers like Samsung. 2) All the research dollars to increase sizes just drive the prices down. 3) At some point soon, there will be no need for further drive size increases. Unless someone comes up with a more space-hungry format than 1080p video.

In reference to #3, there are 2k and 4k video formats that will likely make the jump to consumer level soon. Saw an 80" LCD TV the other day that looked pixellated - higher res would help.

And then there were 4[1]. And soon to be 3[2]. And one of those doesn't make many drives[3].

So we have a duopoly in hard disks. I'm quite surprised regulators allowed this deal.

[1] Seagate, WD, Hitachi, Toshiba

[2] WD is buying Hitachi

[3] Toshiba doesn't make many drives, and only makes 2.5 inch and smaller.

Are they all from the same country? Either way, the PC industry and the related component industry is fading away, so Samsung did the right move here. They probably want to focus more on the mobile markets.

(According to Wikipedia...) Seagate and WD are both have their HQs in California but Seagate is incorporated in Ireland. They also have a wafer fab in Northern Ireland.

Right. We're entering the post PC era. Pretty soon everything will be done on tablets or 'in the cloud.' Neither of which require hard drives.

Where exactly do you think data 'in the cloud' is actually stored?

Given, this may well require fewer hard drives (due to better capacity utilization), but still requires hard drives.

Fortunately, there is more competition in the SSD space. And given that SSD will probably become the norm in laptops and desktops, this shouldn't be a problem for most people.

The SSD market is starting to collapse in on itself as well. Most of the smaller controller manufacturers are starting to be bought by rivals and I'll be amazed if Sandforce makes it until 2013 without being bought. Plus flash chips are already a pretty small market.

Sandforce was already acquired (by LSI in October 2011).

1.4B or around 980M formatted.

So it's now Seagate, Western Digital, and Toshiba. Signs that innovation has moved elsewhere, perhaps.

Apple is the largest buyer of SSDs in the world, but their largest supplier has been Samsung, a company they've been increasingly at odds with in the phone business.

In one day, it is announced that Samsung has sold this business, and that Apple has purchased a competing SSD supplier. Just like that, the shape of the market shifts dramatically.

"In one day, it is announced that Samsung has sold this business, "

Not really, they had sold the hard drive business, but not the SSD business. Read the article, you will notice it says that it provides Seagate a LINK with the SSD business, not with the business itself.

For anyone that is curious about Seagate's SSD play and have been waiting for them to do something customer-facing for a while now: they have actually been doing enterprise flash storage for years, but I would assume through this acquisition we will now see official customer-facing drives being sold next year.

Likely rebranded Samsung 830s for starters (which is a solid drive) and hopefully get some updates and a common controller/firmware between the consumer drives and enterprise drives in 2014/15 to bring them in more a competitive lineup with the SanForce controllers that are dominating (note: still waiting to see what the 3rd gen Intel's perform like, they may change the landscape. Hard to say at this point).

Not thrilled to see only two options when it comes to spindle drives, but I imagine those aren't long enough for this world to really create a hub-bub.

"Most of the world’s disk drives are not able to be built because Thailand is underwater”

Consolidation when supply is depressed is anticompetitive.

This deal was decided months ago, as was the WD/HGST acquisition.

It's not clear to me where you're going with that observation.

Should they cancel an acquisition because of a temporary manufacturing problem? IMO the flooding shouldn't affect our thinking about whether these deal are competitive or anticompetitive.

When there are few suppliers, depressed demand makes it easy for oligopolists to behave like monopolists.

Should they cancel the deal? Certainly their shareholders wouldn't like them to do it out of the kindness of their hearts. I do think that competition watchdogs should be looking at HD mfers very closely now.

I'm surprised that they sold the SSD business. I'm guessing that's primarily what Segate was after.

They did not sell their SSD business. They sold their Hard Drive business.

"The agreement gives Seagate select elements of Samsung’s hard drive business, including Samsung’s high-capacity M8 hard drives and semiconductors used to make solid-state drives"

Samsung will continue to make SSDs and other products based on its NAND business, but Seagate will gain NAND supplied by Samsung that it needs to launch its own SSD business along with acquiring the entire Samsung HDD business.

This was probably the only way for Seagate to complete the deal. Samsung's NAND business is probably more valuable than the entirety of Seagate.

Here's the rundown: http://www.seagate.com/ww/v/index.jsp?locale=en-US&name=...

Thats bad, because the Samsung discs had a much better quality than Seagate or Western Digital. We now have a monopoly of two low quality discs.

Duopoly.

Incredibly interesting list of existing duopolies: http://en.wikipedia.org/wiki/Duopoly#Examples_in_business

As of late, Seagate drives have been pretty crappy, which is a real shame given their former glory. Maybe this purchase will change something.

Agreed. Two of my latest Seagate purchases died while I was very satisfied with Samsung. It might be worse though, buying a Samsung drive, should one expect Seagate or Samsung quality in the future?

This is precisely what makes Seagate drives a dubious purchase for me. I usually go with other brands. Now, there's one less.

Storage professional here. Disk drives failure rate is usually 0.5 to 3% a year. Drives do fail, so you can't draw any statistical significant figures from the failure of a couple of drives among a total of four or five (or even ten or twenty).

However my company's selling drives by the thousands, and here's what I can say: Seagate barraccuda are the worst pieces of crap being sold since the infamous IBM 80GB debacle; their failure rate is 10% a year, no less. Unsurprisingly Seagate just dropped their warranty to ... 1 year! Keep away from these at all costs...

Seagate Constellation seem to be OK but I only have a few of these.

Hitachi 1, 2 and 3 TB look impressive: 1 failure among 2 thousand drives, in 2 years.

WD seem OK, but I haven't nearly enough of them to get significant numbers (a couple hundreds).

Cool! Do you have any numbers for SSDs?

Unfortunately I didn't set up as many of these, but the first generation of SLC SSD were quite prone to failure; The latest SSD with Sanforce 12xx controllers seem to work very well. I had no failure on these yet, though I had some trouble with older designs.

Unfortunately, I recently picked up a couple of Barracuda because of a price break fluke that let me essentially escape the flooding price inflation.

I guess I will use them with trepidation (redundant backups, mostly sitting on a shelf) and plan to phase them out in the coming year and/or into transient cache.

Thanks for the heads up.

P.S. I was set to go with Hitachi (2 TB 7200 RPM) when their prices more than doubled on me. Price aside, are they still a good bet like they were a couple of years ago? (I recall reading that at one point Google was favoring them.)

Also, since I'm adding a postscript, does anyone recall the HD failure rate study that someone put out a few years ago? Of course, things change, but behind the particular models in seem to recall some useful inferences about company/brand quality/reliability.

There were several interesting studies these past years : one from google, one from NetApp, an older one from the CERN:

Google 2007: http://research.google.com/pubs/pub32774.html

Carnegie Mellon 2005: http://www.usenix.org/events/fast07/tech/schroeder.html

CERN on data integrity: http://indico.cern.ch/getFile.py/access?contribId=3&sess...

NetApp 2010: http://synergy-ds.com/netapp/wp-7005.pdf

I may be remembering the Google study and/or something else from about that time frame. I have a vague recollection now of both Google's opinion and and something else that had at least some degree of separation from Google.

Thanks very much for the informative response. I'll have a look at these (as soon as I talk myself down sufficiently from my guilt over my price-motivated Seagate purchase ;-).

In part, I also pushed the button on Seagate (despite the 1 TB "click of death" episode from a few years ago) because a recent WD laptop HD purchase went rather bad with incessant parking that is apparently inherent to the model's firmware. I finally fixed that on the XP Pro machine it lives in by finding and setting to run on start-up:

http://sites.google.com/site/quiethdd/ [1]

But not before SMART reported significant aging for the drive. Which rather pissed me off. (I should pull it and RMA it -- 5 year warranty.)

So, that helped lead me to Hitachi. Then the price inflation, plus the news that WD is buying Hitachi, and I figured I'd give Seagate another go.

I hate purchasing consumer electronics, these days.

1. Which I found at about the same time I learned I could tweak the relevant settings manually -- so, I went with the pre-packaged implementation.

Which Seagate Barracuda models exactly are bad, in your experience? I think we cannot generalize across all models and generations, can we?

The worst are the 1TB ES2. These are the same as 7200.11 in the consumer series.

With samsung the world leader in ram I would have thought they could've done some great things in ssd field. Bummer.

As the largest flash vendor, Samsung may win no matter which controllers are used. Seagate has no consumer SSDs so I can understand why they want to buy that business from Samsung.

Ah, the good 'ol iPhone bundling tactic. I'm definitely not an opponent of sticking to what you're good at, and doing it best. And with this deal, I guess that's what's happening with both companies!

1.4B .. money they will need to keep investors happy while burning money on smartphones

Glad the sale wasn't the other way.

I remember when Seagate first bought Maxtor.

In the short term this is good for Seagate. In the long term though, I think this is good for Samsung. More and more of our memory needs are being met by online storage.

Sure we'll need NAND going into the future. But are we going to need it in the quantities that we currently demand when cloud storage is becoming more and more popular?

Online storage providers still need to purchase hard disks.

Online storage providers don't use NAND, and they won't be consuming drives at the same rate as consumers.

Reply on news.ycombinator.com