WD who are consistently one of the top two hard drive manufacturers in the world announced on Monday that it has agreed to purchase Hitachi's Hard Disk Drive Division. Costing over $3.5 billion cash and a nice pile of Western Digital shares worth in excess of $750 million it's certainly not a cheap purchase but will set Western Digital in premier place to become consistently the world's biggest hard drive brand, the question is will this be good for us consumers or not?
Western Digital Corporate Logo
Back in 2003 Hitachi purchased from IBM its hard drive division and renamed it Hitachi Global Storage Technologies (HGST). The IBM brand had helped drive innovation up till 2003 with many successful products; however they will forever be remembered for the "IBM Deathstar" series of drives with their reportedly dire failure rates. Anyone who has been following storage technology will know the IMB Deskstar 75GXP and its sensational 50% failure rate within the first year of purchase with many failing within weeks or days. Many consider this to be the worst hard drive model ever released and one of the worst technology products of all time.
Under Hitachi's leadership the old IBM hard drive division has developed hugely successful hard disk drives, enterprise-class solid state hard drives and external storage. Hitachi have innovated consistently bringing in the first 1TB drive way back in 2007 among other notable achievements. Personally I will forever remember Hitachi for their "Get Perpendicular" hard drive marketing video literally singing the benefits of the most thrilling topic of perpendicular recording.
Western Digital on the other hand has developed and enviable market position where they can sell hard drives to every market, every region and every type of user without risking alienation. There are few tech companies who can pull off having a product like their 10,000RPM VelociRaptor gaming drives and still have respect in the business market with drives like their RE4-GP. This makes Western Digital somewhat unique in pulling off being everything to everyone, because of this you will be hard pressed to find any computer enthusiast who has not had experience of; if not owned, a Western Digital Drive.
This presents some unique concerns from this merger for any enthusiast, while each brand on their own has innovated and developed their own technologies they are both seen as different brands to different people. While Hitachi does not have much of a foothold in the consumer market if you pull open almost any laptop of recent years you have a good chance of seeing a Hitachi TravelStar mobile drive, the same is not necessarily true of Western Digital. If the brands are combined this could lead to a stagnation of innovation from Western Digital to keep its large OEM customers happy; which it will take on with the acquisition of Hitachi. This is not good for end users and could potentially see the end of more niche enthusiast offerings like the Raptor drives. You struggle to see someone sat around a boardroom desk at Hitachi back in 2003 approving such a niche product for such a limited market. Despite having been in production since early 2003 there is no direct competition in the same market which says something about just how radical the Raptor series is.
Hitachi Corporate Logo
The next concern is pricing. At the moment competition keeps the pricing down amount the hard drive manufacturers, with Hitachi normally occupying the lowest price points with solid slightly bland products. The merger will allow Western Digital to reduce its production costs which you might think will result in lower drive pricing for us consumers. It might be worth thinking again. If you consider the competitions costs will not drop then you would have to question the need for Western Digital to alter its pricing structure, the merger will just mean increased profit margins for Western Digital and little benefit to end users wallets.
Having personally purchased hard drives from all the manufacturers I have to say Western Digital and Hitachi are my two favourite brands; however this merger leaves me feeling empty.
Innovation could stagnate, pricing will stay the same thanks to the big corporate machine and the whole hard drive market could be a whole lot worse off in a few years' time.
Bring back the risk of using one of the DeathStar drives, bring back innovation that could just not work, let niche's be filled that just shouldn't be and above all bring back competition to keep pricing low.
Could be a very sad year for hard drives, there is potential but I am sitting on the sceptical side of the fence.