Maxgate (and RAF vs. large monkey)

In today's IT Blogwatch, we look at Seagate's aggressive move to purchase Maxtor. Not to mention helping the RAF's Captain Suave battle a Large Monkey and rescue Dr. Hillary Lovely ...

For the holidays Seagate bought ... a rival, as Lucas Mearian reports, "In a move that analysts said could stop a slide in hard disk drive prices, Seagate Technology LLC announced today that it will acquire rival drive manufacturer Maxtor Corp ... By sharing expenditures on research and development, Seagate and Maxtor hope to expand the range of products they offer. The deal will allow the companies to operate more efficiently and lead to cost savings ... While history has shown that when two hard disk drive makers merge, their combined revenue drops, Seagate expects the deal to boost earnings per share by 10% to 20% after the first year of joint operations ... Maxtor, a $3.7-billion company, has been bleeding money recently. Last year, it reported a $181 million loss ... In comparison, Seagate, a $7.5 billion company based in Scotts Valley, Calif., saw a $707 million increase ... According to research firm IDC, Seagate leads the marketplace in both desktop and enterprise-class drives. Maxtor is No. 2 in desktop drives but slipped from third to fourth place in enterprise-class disk drives last quarter. The majority of Maxtor’s business is in 3.5-in. hard disk drives for PCs." [So let's see... "cost savings" and "stopping the slide in prices" eh? Hmmm.]

» Ars's Eric Bangeman wonders about the impact of the deal on consumers: "Not so long ago, there were several manufacturers to choose from for do-it-yourself system builders. With the merger, consumers are left with Seagate, its main rival Western Digital, Hitachi, and Samsung for desktop drives. As the cost per gigabyte has decreased over the past several years, pressure has been building on the major drive manufacturers to increase capacities and grow their market share. With the PC market poised to continue growing, home theater PCs becoming more popular, and users demanding more and more storage space for content of all sorts (I'm looking at you, HDTV lovers), demand is likely to be strong for the foreseeable future. The new question is whether consumers will enjoy the same upward trends in storage capacity and downward movement in price now that there are fewer players fighting for market share." [And the answer is... errr... no]

» Michael, from "TiVo upgrade specialists" WeaKnees: "The bulk of the drives we sell are made by one of these two companies. So this could either mean increased innovation in the drive world, or increased prices due to less competition. Or even both ... Maxtor had most of the early business in DVR hard drives - early on under the Quantum company which they bought in October 2000 ... For the entire first generation of standalone and DirecTV TiVos, Maxtor/Quantum made all of the drives. But that has changed, and all TiVo DVRs today ship with either Western Digital or Seagate drives from the factory. Maxtor hasn't been able to keep the price competitive apparently." [Translation: Seagate had deeper pockets]

» Philip Letts, Techboard: "Seagate's acquisition comes as the market for digital storage is booming. Corporations and individuals are saving vast numbers of files that are ever increasing in size, especially with the rising number of audio and video files ... Seems to be all about scale. The benefits to be derived from the deal are firming up Seagate's number 1 position in storage and wringing cost improvements from Maxtor in particular. A classic utility style deal."

» BusinessWeek's Cliff Edwards: "A few months ago, execs at hard drive makers Seagate and Maxtor insisted they weren't worried about the sudden shift in sentiments toward flash-based memory ... Let's face it, though, there has to be concern about the suddenly explosive market for NAND flash. Samsung, Toshiba and SanDisk are running all-out to supply consumer electronics markets ... And now that Intel has finally cried uncle and jumped into the market in partnership with Micron ... That's got to be giving the hard drive makers the willies ... But in a few years' time, as costs come down for flash and densities get higher, NAND is likely to make a huge dent in hard drive sales. It's probably an inspired move now, then, that Seagate is moving to get ahead of the curve on lowering its own costs by taking a chief competitor out of the market."

» Techdirt's Mike is in the holiday mood already: "It's tough to come up with too much that's interesting to say about Seagate buying Maxtor for $1.9 billion other than the fact that we weren't totally sure they had been separate to begin with (it's a joke, people). All the various storage companies seem to blend together in our minds, and now they're doing that in real life too -- which hopefully makes it easier to keep track of them."

Buffer overflow:

• FactoryJoe: Revving a classic cliché
• ITtoolbox: Revolution or Evolution?
• John's Performance Blog: Invaluable tool!
• Techdirt: Will Fixing The Internet Break It?
• 'Roo-minations: IBM Buys Micromuse
• The PC Doctor: Antivirus response times
• Microsoft Monitor: What Partners Need Now
• AMIS: Three interesting announcements
• Zoli: Salesforceless.com
• Mitch Betts: hotmama666 not a great screen name for IM at work [Your humble blogwatcher agrees]
• Douglas Schweitzer: Beware of the gift of Malware
• Shark Tank: Indestructible, yes -- immovable, no

And finally...  Captain Suave vs. a Large Monkey

Next week, your humble blogwatchers will be taking a break, but we've already resolved to see you again on Jan 2nd. Resolved... geddit? [You're fired - Ed.]

Richi Jennings is an independent technology and marketing consultant, specializing in email, blogging, Linux, and computer security. A 20 year, cross-functional IT veteran, he is also an analyst at Ferris Research. Contact Richi at blogwatch@richi.co.uk. Also contributing to today's post: Judi Dey, our very own Antipodean.