Asia pays off for Seagate

Hard-disk player sees revenues from Asia-Pacific region, for the first time, contributing over half of company's total revenue, reveals executive.
Written by Kevin Kwang, Contributor

SINGAPORE--Amid an improving global hard-disk drive (HDD) market, Seagate Technology said revenue from the Asia-Pacific region crossed the 50 percent-mark for the first time in the company's history, according to an executive.

During a media briefing here Friday, Teh Ban Seng, vice president and managing director of sales and marketing, Seagate Asia-Pacific and Japan, said the company's revenue from the region accounted for 53 percent of overall revenue in the first quarter of its 2010 fiscal year, ended Sep. 30. Asia-Pacific revenue clocked 50 percent of total revenue in the following quarter. In comparison, the Americas region generated 26 percent of overall revenue in the second quarter, while the EMEA (Europe, the Middle East and Africa) came in third at 24 percent.

Teh added that Seagate's business in the Asia-Pacific saw 22 consecutive quarters of growth, over four-and-a-half years, registering a compound annual growth rate (CAGR) of more than 30 percent.

The company's enterprise business saw an overall drop of 35 percent in year-on-year growth in the first quarter of 2009, he said, but noted that this figure has since rebounded. In fact, Teh appeared optimistic about Seagate's prospects in this space. "We're very, very bullish for growth rates in excess of 10 percent this year, and with the market picking up pace, this figure is already considered conservative."

According to Teh, the HDD industry is expected grow 30 percent and rake in US$20 billion in the next three years, with the enterprise and solid-state drive (SSD) businesses serving as key growth drivers.

Elaborating on the company's SSD plans, he said Seagate will continue to focus on producing flash drives for the enterprise market, rather than the consumer space. The storage vendor unveiled its first SSD offering, the Pulsar, in December last year.

Teh said Seagate's "30-over years of experience" and "intimate understanding of enterprise needs and requirements" will prove to be its competitive differentiator in the enterprise market, over other manufacturers such as Intel and Sandisk, most of which come from consumer backgrounds.

The company plans to target the mid- to high-end enterprise storage and servers segments that require products with high I/O performance and low energy consumption, he added.

According to Teh, Singapore ranks third--behind Australia and China--among Seagate's largest markets in the region, which is significant for a country with such a small population. He attributed this footprint to the island-state's quick user adoption rate for new technology.

Its presence here underscores Singapore as a "very important market for [Seagate]", Teh said, noting that that one of the company's three global research and development centers is housed here.

To demonstrate its commitment to the region, Teh said Seagate is planning to invest US$750 million in capital expenditure to expand its manufacturing capabilities. The company's investment in research and development will continue to be "above and beyond" this sum, he said, but did not provide an actual figure.

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