Being Seagate hasn’t been easy during the past two years.
While the company wasn’t impacted by the floods in Thailand (a center for memory manufacturing) in late 2011, it has been dealt a rough hand during the past two years in the form of widespread mechanical failures in certain drives, a customer backlash over shortened warranties, and scathing reports from equities analysts.
As SSDs rise in popularity, the traditional hard disk industrial establishment has struggled to keep up. It was only in March that Seagate was able to put out a consumer SSD (after a planned takeover of OCZ went awry).
But for Seagate’s BS Teh, the managing director for the company in Asia and a Senior Vice President, the future is bright for one of the only major remaining hard disk manufacturers.
“We see an extremely bright future. Depending on who you talk to [future demand] is at different levels, but it’s unanimous that it will be a lot higher than where we are today. The debate will be how much higher,” Mr. Teh said in an interview with Hardware Canucks. “Demand for storage continues to go unabated. It’s becoming more and more of a realization that SSDs are not going to take over the world. They will grow, but it is impossible given the current investment run rate for SSDs to take over disk drives.”
“Financially, and economically it is also impossible for it to happen — in the immediate future. If you put all these together, the storage industry is a great place to be and the hard disk industry is a good place to be at this time.”
Short seller Jim Chanos does not share Mr. Teh’s enthusiasm for the storage sector. In early May he expressed his dire lack of faith in the hard disk industry at an investor’s conference and put out a report shortly after summarizing his findings. Chanos doesn’t believe that the year-over-year growth in the server and cloud storage sectors will offset the decline in the PC business — where hard disk manufacturers like Seagate sell most of their units.
But for Seagate, the Chanoses of the world are simply player haters and not appreciating the fact that the post-PC era is also a hard disk intensive era.
“If you track the stock today, its actually diverging from PC companies. It used to track PC companies very closely, except this past six months where its actually diverging. PC stocks are declining or have stayed flat while disk drive stocks are climbing,” Mr. Teh said.
“Just this past week both Seagate and Western Digital have hit 52-week highs several times.”