Seagate looks beyond PCs to spur disk sales
The disk drive maker sees a strong future in consumer electronics, a market the company admits is very different from its current focus on desktop computers and servers
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The company is angling to land contracts to supply disk drives for portable MP3 players, Internet-connected stereo systems, set-top boxes and other devices, said Andy Batty, senior product director for European marketing, at a news conference at the CeBit trade show.
As evidence of the effort, Batty revealed the existence of a testing center at its Longmont, Colo., facility where a staff of about 80 or 90 workers are testing consumer electronics products with Seagate drives by submitting them to shocks, rattles, freezing and baking.
Consumer electronics devices are currently a small part of Seagate's sales, but the company expects the market to grow dramatically.
Of the company's annual sales of 40 million units, only about 2 million currently are used in consumer electronics devices. Seagate won places in Microsoft's upcoming Xbox game console and the competing Sony PlayStation as well as Microsoft's WebTV Internet appliance.
Seagate is hoping to augment slowing sales in its core markets. Earlier this month, the company said it will close a factory in Malaysia by year's end--its second in five months--and lay off 4,000 workers.
To make the transition into the consumer electronics market, Seagate faces some major challenges.
For one thing, many consumer electronics companies simply aren't used to using hard drives and don't know how to design them into products, Batty said. And there are a host of technical challenges, including making drives shockproof, cool, quiet, and sufficiently inexpensive.
"Historically hard disk drives have been very fragile devices," he said. "Home users are not used to having to treat devices with a great deal of respect."
For another, Seagate doesn't have any 2.5-inch wide products, the size used in laptops, much less any 1-inch wide products such as IBM's Microdrive. Though many consumer electronics products don't need those smaller systems, companies with expertise in the area have extensive experience with issues such as heat dissipation and low power consumption.
Seagate also faces competition from other storage technologies, such as flash memory or recordable CDs.
Naturally, Seagate says it's addressing many of the problems.
"We're almost at the silent drive," Batty said. "It's very difficult to detect with the human ear."
And hard disk prices now make their use viable in more than just computers, he said, predicting that many portable MP3 players will move from flash memory to hard disk storage soon. A 10GB drive can hold about 100 CDs worth of MP3, he said.
The Colorado testing offers help designing as well as testing consumer electronics products, Batty said. Another helping hand will be the easier-to-use packages that unite drives with necessary electronics to make the drives easier to incorporate. Thomson Multimedia and Seagate have formed a joint venture, CacheVision, to build those products.
Life hasn't been easy for Seagate, a company that took itself off public markets through a complicated transaction a year ago. Part of the reason for the move was to avoid some of the punishment of investors who were displeased with the ups and downs of the market.