Well, here we are again .. the so-called flashers are back.
And once again, they really don't care about the technology - SSD vs HDD. What they really care about is trying - once again - to throw out whatever FUD they can latch onto to try and talk the HDD sector down.
It is like clock work - every few years we go through this cycle. Gosh, it's getting old. But I guess there's a sucker born every minute.
So let's look at some numbers: the cheapest practical SSD runs about $90 for 120GB, the cheapest practical 2.5" HDD is $60 for 500GB. So SSD is no longer 10x HDD, just 6x.
The Hynix fire is just a temporary blip on the longer term trend - like a flood. It does not change the long-term economics of flash manufacturing - which is still very high. Before the Hynix fire, flash supplies were becoming constrained. It takes A LOT of money to build new flash production and the flash manufacturers are just as hesitant and cautious as the HDD guys. They would rather keep prices & margins up.
You think the PC market has migrated to all SSD on the high-end? Just because Apple sells only Macbooks with SSD? I heard Apple may be getting out of the PC business. The fact is, most smart people with a SSD installed will also have a HDD included or attached - for either bulk data storage or backup. And the cloud is used to move/share transient data between devices. Most of the cloud spins on HDD.
So long as the content generation curve stays well above the areal density increase curve, there will continue to be robust demand for digital storage supplied by HDD. Because that's about the cheapest storage available.
What you see is SSDs chasing the LOW END of the consumer market with a premium priced product (relative to HDD). They are trying play in the space abandoned by the HDD makers. The same carnage that befell the HDD makers - constantly chasing market share - will occur with the SSD market. There is still a lot of culling the weak from the herd to occur in the SSD market.
With flash prices trending up, and fabs costing even more to build, don't bet the underlying media (NAND) will support continued price declines. HDD makers really only had to compete with themselves. SSD makers have to compete with themselves AND all the other consumer markets for NAND.
SSD: It will be another bloody market.
"But with HDD going the way of the neanderthal (eventually)"
Eventually, we're all dead. In the meantime, made good money with these Neanderthals.
And if you accept those default settings, what are you going to do if you have no internet connection? Also, make sure those files aren't too large: the US still suffers from abysmal broadband speeds (especially upload speed) throughout much of the country.
The smart thing to do is turn on the offline files capability - where files are stored locally as well as in SkyDrive. You can work on your files offline. The two will sync when a connection is re-established.
This new feature may hurt the USB flash drive business way more than HDDs.
BTW: the way this works is exactly the same as Windows Servers with Exchange have worked with client systems for years. They've extended the business model down to the consumer.
I sold out AH on the Jan. earnings. I thought it would take a breather and I needed to decompress and realign all my holdings. The run in STX had significantly skewed my net worth into one stock (STX) and that was not healthy.
The stock didn't take much of rest, so I bought a little back starting in late Feb. and over time have about 1/4 the total I sold in Jan. At least I was able to get back in at prices under $39.
I continued to own some WDC which I've held since just after the flood reaction.
The industry seems to be behaving itself very well. Don't let the decline in PC sells or the total decline in TAM fool you: the connection between those two and HDD capacity has changed. Hence, surprising stability in prices and gross margins.
It's not over till the fat lady sings:
"On October 15, 2013, Western Digital Corporation (the "Company") was informed that the Minnesota Supreme Court (the "Court") granted its petition for further review of the decision of the Court of Appeals in the matter of Seagate Technology, LLC v. Western Digital Corporation, et al. The order provides that the parties will file briefs with the Court, and the Court will subsequently set the matter for argument before the Court."
What probably drove the HDD stocks up yesterday (and it looks like somebody is talking the opposite side this AM)
Deutsche Bank‘s Sherri Scribner continues to rate disk drive makers Seagate Technology (STX) and Western Digital (WDC) Buy, seeing some potential for upside in disk drives:
Both STX and WDC guided C3Q-13 industry TAM to be slightly up Q/Q and we believe the market shipped roughly 138M units in the Sept quarter, up 3% Q/Q, vs. the PC market which was up 8% Q/Q. With Y/Y weakness in PCs well telegraphed, investors remain focused on ASP trends and gross margins, which we expect to hold up in C3Q-13 despite investor concerns. With PC demand still soft, we expect conservative C4Q-13 TAM guidance which we expect to be flat or down slightly Q/Q. We remain positive on the group, driven by our long-standing view that robust data growth will be the key driver of demand and that industry consolidation will lead to more stable pricing and profitability. We are buyers of both STX and WDC.
Guess that deflates the Samsung buyout rumor.
STX must be expecting a large check to be written soon. Wonder how they financed the rest and at what price?
If you're trying to imply that Samsung will buy STX ... I don't think so. I could see Toshiba doing it before Samsung. And I don't see that either. Besides, if the other point in your post is correct, why would Samsung want anything to do with a bunch of ex-Maxtor people?
Somewhere along the line, somebody will realize that he who controls the data controls everything. Why one of the big storage OEMs hasn't bought STX or WDC in order to skewer their competition ... I guess the math don't work.
In the meantime (like for a couple more years), they can throw more meat between the taco shells and increase avg unit capacity 20%. Incrementally add component capacity. STX seems to be running near full boat, probably not WDC. As Coughlin points out, data centers aren't too concerned about the meat addition to meet the demand. And his mention about needing AD increase to support ultrabooks ... well, I remain unconvinced of that need. What we have now seems more than enough for the ultrabook\notebook market - whichever way that is going.
Eventually, increases in the AD will be required. I'm no expert on how to do that or what the best way is. That's what other engineers are paid to figure out.
Regardless of the outward pretense, this schmoozing in China has to be a prelude to a hard push to get the MOFCOM shackles removed come next March.
If WDC gets to fully consolidate and integrate WDC (old) and HGST, it might remove $100Mill/qtr in expenses (which flows to the bottom line).
"Flash is a disruptive technology"
We have been arguing pro & con on flash adoption for close to 10 years on these boards. Hardly a surprise disruption. The only people that viewed flash as disruptive were those that had a vendetta against the HDD companies. They really cared less about the technology - they just used it as a bogeyman to talk down the HDD companies.
Some of us viewed flash as evolutionary - that it will be adopted by storage manufacturers, OEMs and consumers when it is right - from both a technology and cost perspective. Flash is nothing more than a different kind of media to use for a drive. Look at a SATA flash drive and look at a 2.5" 7mm HDD. Do they look any different? Do they connect any different? They have different performance characteristics and the respective prices reflect that.
WDC (and STX) are NOT simply HDD manufacturers. They are storage manufacturers. They make storage devices from the component level through finished arrays (and even more) - including storage services. Both companies have been very deliberate about adoption of flash - choosing to enter the space when the technology and the economics can support the commitment of resources.
You're mixing up projected & historical earnings estimates and actual EPS. On the actual EPS - for the year just ended 6/28/13, the official EPS is $3.98. That's because after the quarter ended, WDC restated 4th qtr EPS to reflect the litigation charge. 4th qtr EPS was revised from a gain of $1.71 to a loss of $1.12, a charge of $2.83/shr.
The EPS estimates reported on Yahoo will not reflect the restatement.
I'm not saying STX will have anything to do with FIO - and it will take way .. WAY more than $40Mill to tussle for FIO. Just commenting about how bizarre this business has become.