Seagate buys LaCie: good for us?

Seagate buys LaCie: good for us?

Summary: Seagate announced this morning that they are purchasing LaCie, the French consumer storage company, for $186 million. Should we worry?

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TOPICS: CXO, Hardware, Storage
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It's the money For decades hard drive companies have moaned about their low margins while they've done all the heavy lifting to make storage cheaper. Seagate has spasmodically attempted to diversify into higher margin businesses - their $100+ million investment in Xiotech was particularly mystifying - but with little success.

The basic problem is that drive companies can't be seen to be in competition with their most valuable customers, the HPs, Dells and EMCs of the world. The high end storage products that companies buy typically carry gross margins in excess of 60%, while drives alone are in the 10-15% range.

And much of those drive margins have come from the high-end drives - 10 and 15k SAS and Fibre Channel enterprise drives - whose market is rapidly shifting to solid state drives. Not good.

Consumers to the rescue Lately the drive vendors have found a way: focus on consumer storage. The Seagate and Western Digital consumer/SOHO storage businesses have been growing fast with much fatter margins.

This is good for Seagate and WD. But what about us consumers?

The Storage Bits take Hard drives are a mature industry with only 3 manufacturers still in the game: Seagate, WD and - a distant 3rd - Toshiba. Forget about the cutthroat price competition that regularly delivered super-cheap raw drives to hobbyists.

Instead we'll see steadier price-per-bit declines at about 40% annually for the next several years. Less than fabulous, but I can live with that.

But there's a larger problem. In order to keep driving down the cost of rotating storage, the remaining vendors need to invest in expensive new tech (see Engineering the 10 TB notebook drive): HAMR (heat assisted magnetic recording) and patterned media.

Each of these will require billions in investment over the next decade to bring to production, assuming they succeed. And for that the drive vendors need to be making many more billions.

Thus the move into consumer storage is not only smart business for drive vendors, but it also promises to keep disks moving along the price/performance curve we've come to expect.

For all the benefits of flash SSDs, there is no way they can replace disks as a bulk storage medium. We need disks to keep improving, and drive vendors need profits to pay for that.

But even better, Seagate is putting LaCie's founder in charge of their consumer storage business. Here's hoping that LaCie's focus on design excellence and product quality carries over into the rest of Seagate's consumer storage.

Comments welcome, of course.

Topics: CXO, Hardware, Storage

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20 comments
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  • Hoping...

    Kind of 'shy'd' away from Seagate several years ago after a number of them kept failing in my enterprise desktops, been a WD buyer since, not to say I don't have the occasional WD HD issue, but their problems seem to be fewer and farther apart...could just be my experience though...LaCie drives were mostly good, it was the housings that would have 'issues' some times...here's hoping they produce a quality/reliable product...I'll give them a second look because of the buyout/merger...
    Cubbie
    • I had similar issues with Seagate hence my WD preference

      It would be nice to have another choice.... I hope Seagate succeeds in their intended improvements.
      gcpa
      • Statistical variation

        Both Seagate and WD produce high quality drives. But drives fail. You guys happened to get more failures than average - it happens - and thus your opinions.

        I've had some 2 dozen drives in the last 5 years and no particular issues with either vendor, even though I've had drives fail. Normal wear and tear.
        R Harris
      • @R Harris

        Normal wear and tear?
        I hope you are joking. In the last few years, Seagate had an entire line of drives with a firmware error that would brick otherwise perfectly good drives. Of my 4 x 1+2tb drives in home servers, I've had to RMA about 7 or 8 times in the last 2-3 years. Thank goodness Seagate had a decent warranty in place (which they are now changing), and I had double-redundancy, or else I would have been fuming.... Seagate Barracudas used to last 5-8 years easily!

        WD have had their corkers as well, so since the other manufacturers have been absorbed, we are left with poor choices. Shoddy workmanship, is just that.
        12312332123
  • Opportunity beyond disc?

    Cubbie, my experience has been just the opposite with WD drives giving me grief and Seagate being very reliable. I suspect things change periodically.

    I wonder if buying LaCie will allow Seagate to move into some other areas since LaCie has produced other products like optical drives and PC accessories. Or will they sell off or close these parts of the business?
    JazzGuyy
  • Circle of life...

    It just leaves some room at the top for someone new to come along and step up to the plate...

    Hakuna matata
    i8thecat4
  • LaCie? Quality?

    I have 2 LaCie's consumer drives holding doors open, a trash can filled with dead crap LaCie power supplies and my 4th "2big" Quadra failure. I'm buying WD if Seagate puts the head of LaCie anywhere but in charge of Support (seems LaCie gets a lot of practice there) or mopping floors.
    can4spam@...
    • No issues with my 750gb LaCie...

      And I'll tell you why: I turn it off after I finish using it. It has a power switch for a reason. External drives with passive cooling simply don't stand up to 24/7 use.

      I like LaCie drives because many have on/off switches, and those are the ones I'll buy to supplement my 750gb.
      sframberger@...
    • Lacie Quality

      You do realize that LaCie only makes the enclosure - there's likely a Seagate drive inside?

      Consumer external drives like the Lacie and WD Passport were never intended for continuous duty cycles. They are designed to be used for backups and file transfers.
      SteveRMann
      • you nailed it

        I was wondering if anyone was aware of this. It is amazing just how ignorant the readers of tech blogs can be . . .
        photomstr@...
    • Ok, I'll Rise To The Troll

      1) My comment was about putting the LaCie's founder in charge of the consumer division. It seems like a dubious decision since his company's pretty but poorly regarded products (in my quarter), their power supplies, cooling and circuitry failed far too often for their price point and hype.

      2) @sframberger The LaCie consumer drives (a.k.a. door stops) were used as portables, that means they were "off" whenever I wasn't using them. The 2bigs HAD FANS and were used as media servers so they stayed on. 4 failures in 2.5 years? "Enterprise" drives, as LaCie labelled the 2big, should be able to handle more than 8 months. Thank-you for telling me why but you do not know and should have made your point about on/off switches as your own comment, not a reply that doesn't apply.

      3) Thank-you SteveRMann, I knew that and it doesn't change my point. In my experience their "drives," as in "LaCie Drives," had a 100% failure rate and less than 8 months MTBF and it was NEVER the HDD; always the LaCie parts. I understand your point but still see my point 1) above.

      4) @photomstr: Ignorant? Really? You are the troll I was referring to in my post title. Your "point" was pointless. Attacks on other posters that you do not know and never met do not contribute to the conversation.

      5) I now understand why others speak poorly of ZDNet commenters. *SteveRMann is excluded from my rant's 5th point.
      can4spam@...
  • It's Seagate

    I'm not the first customer to rail on their list of poor quality drives.

    And it is all about the money.

    Until customers choose to stop being played and toyed with.

    Seagate has some work to do, but anyone can change their reputation.
    HypnoToad72
  • This Sucks

    In so many ways the HD market has shrunk from many competing companies to a few who as one of their first orders of business cut the warranties on their drives from 3or 5 years to 1 year the same thing was tried a few years ago and a competitor (Samsung) wouldn't toe the line and there market share went up quickly!Now that WD and Seagate control the market they can get away with this and there's no one to come up as competition to them,ah well I guess getting screwed comes with the computerland turf PS have 5 seagate 1TB drives in a raid 5array and have to replace at least 1 drive per year and on another computer we have 8 500GB WD drives in an array and I've never replaced one in 4 years Seagates have a high failure rate and that why with this warranty drop I'm going to have to buy drives regularly instead of them being replace under warranty.
    wizardb@...
    • Compare Apples to Apples

      Everyone's experience can be quite different - all the drives that have failed on me have been WD drives (3 year warranty). None of the numerous Seagate drives that I have purchased for personal use or for business machines (used in RAID arrays) have yet failed. Many of these Seagate Drives have been in operation for over 5 years. There are, however, a few guidelines that I have followed over the years.
      (1) After several WD failures, I always try to purchase drives that come with a 5 year rather than a 3 year or 1 year warranty
      (2) From all that I have observed, for some time now 500GB are some of the most stable drives that you can purchased. Hence I have resisted the lure of higher capacity drives especially those with a 1 year warranty.
      Wayne Reid
  • Hey - What about SSDs??????

    Robin Harris - you made an unfavorable one sentence statement regarding SSDs. In spite of the fact that HDDs are getting cheaper and larger - they STILL die on us. I've been waiting for the SSDs to make HDDs obsolete and you imply that ain't gonna happen. When I see the pinky-fingernail size of a 16GB micro SD memory card that doesn't have any moving parts and bearings to fail and then you indicate that HDDs rule; I need to be updated. But the SSDs WILL take over. How much smaller can SS memory get? Shouldn't be a big deal to put a bunch of them together to make a super HC SSD that will last forever. Your thoughts, PLEASE.
    seahog
    • SSD's can and do fail...

      http://www.tomshardware.com/reviews/ssd-reliability-failure-rate,2923.html

      Standard hard drives "fail gracefully"...SSD's fail more abruptly.
      sframberger@...
      • fail

        the only drive that ever failed on me died instantly a week before the warranty expired and WD sent me a new one in 24hrs. 5 or 6 years ago Seagate had a lousy rep but I hear they pulled up their socks. I always use WD or Maxtor . . .
        photomstr@...
    • SSD's have no moving parts

      and yet they do not last any longer than a mechanical harddrive, have lower capacities, a limited speed advantage and command several times the cost. Hmmmm..... I wonder why they haven't replaced harddrives yet? It just doesn't make any sense!
      12312332123
  • I won't touch another Segate Drive

    I have had 7 Seagates fail in 5 machines to get RMA's with them is a night mare. I feel sad for LaCie. When Maxtor and Seagate merged it was the worse thing for Seagate. I had an Iomega that was Seagate loaded and that too failed. I still got the failed Seagates and have to say the last one I had cause it failed in days I took back to retailer after nightmare dealing with Seagate's customer service and decided to pay the more expense and go to Western Digital...
    wpreece
  • I've had extensive dealings with Seagate C/S

    @wpreece
    [i]I have had 7 Seagates fail in 5 machines to get RMA's with them is a night mare.
    ... I took back to retailer after nightmare dealing with Seagate's customer service ...[/i]

    This over a large span of time, and I can tell you they have some of the best reps going, and some of the WORST. If it is your misfortune to deal with the clueless ones, who really amount to imbeciles, then I pity you. This sadly also includes Tier 2 support and supervisor types in the mix.

    It really is a crap shoot, and something Seagate should be doing more to improve.
    klumper