Western Digital WDC recently unveiled its much-awaited 18TB and 20TB hard disk drives (or HDDs). The company announced that it will sample the new HDDs to select customers by end of calendar 2019 with production ramp projected in the first half of 2020.
While 18TB Ultrastar DC HC550 HDD utilizes Conventional Magnetic Recording (CMR) technology, the 20TB Ultrastar DC HC650 HDD is based on HelioSeal technology and host-managed SMR (HM-SMR).
With the new drives, Western Digital aims to reduce the total cost of ownership (or TCO) of data center customers.
Moreover, expanding portfolio with robust solutions instill confidence in the stock. Shares of Western Digital have returned 58.9% year to date, outperforming the industry’s rally of 9.7%.
Into the Headlines
Western Digital also announced nine-disk mechanical platform to aid data center customers accelerate complex workloads in an optimal manner. The platform comprises energy-assisted recording technology.
Moreover, the company aims to provide 10TB Ultrastar DC HC330 HDD in six-disk platform, 14TB Ultrastar DC HC530 HDD in eight-disk platform, nine-disk 18TB Ultrastar DC HC550 HDD in nine -disk platform; and 20TB Ultrastar DC HC650 HDD in nine-disk platform.
Western Digital also announced the availability of 10TB Ultrastar DC HC330 and 14TB Ultrastar DC HC530 drives.
We believe, incremental adoption of the latest high-storage capacity drives and multiple-disk platforms will boost the company’s financial performance in the days ahead.
Robust Features Hold Promise
SMR technology is touted to be an improvement over CMR technology, which is a key driver for Western Digital’s latest 20TB drives, in particular. In fact, Dropbox is looking forward to utilize the new 20TB drive, which is a major positive.
Growing clout of SMR technology favors prospects of Western Digital’s new 20 TB HDD. The latest product roll out is in sync with the ongoing transition of data center customers from 14TB to 18TB and beyond.
Moreover, both 18TB and 20TB drives boast of MTBF (mean time between failures) of 2.5M hours and high power-efficiency functionalities. Robust sequential write and high-performance capabilities are anticipated to enable data center customers to manage complex data workloads seamlessly.
Per the company’s estimates, by 2023, 50% of its HDD Exabyte shipments will be SMR technology driven. Moreover, per TRENDFOCUS data, “14TB will continue to be the industry’s dominant capacity point through the first half of 2020.”
The aforementioned projections are expected to strengthen the company’s competitive position in the storage market against Seagate STX and other peers.
Growth Prospects Abound
Western Digital is investing heavily in order to deliver high-capacity storage devices that would support expansion of cloud infrastructure and cloud applications, which bode well given favorable market trends. In fact, per IDC data, global spending on public cloud services and related infrastructure is envisioned to hit $210 billion in 2019, up 23.8% over 2018.
The expanded capacity is expected to increase demand for the HDDs among large enterprises, small and medium size businesses (SMBs) and creative professionals. The HDDs are capable of addressing growing storage needs amid huge influx of data generated by emerging technology and services like augmented and virtual reality (AR/VR), high resolution.
Notably, per recent IDC estimates, the global datasphere will grow to 175 zettabytes (that is a trillion gigabytes) by 2025, from 33 zettabytes in 2018. The effective storage is essential to properly harness this secular growth in data, which favors the prospects of Western Digital’s latest solutions.
Zacks Rank & Key Picks
Western Digital has a Zacks Rank #2 (Buy).
A couple of other top-ranked stocks in the broader technology sector are Fortinet FTNT and Anixter International AXE, both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for Fortinet and Anixter is currently pegged at 15.5% and 8%, respectively.
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