Seagate to buy controlling stake in storage rival LaCie

"To the cloud!" they said -- and everybody followed. Seagate-LaCie deal shows accelerating consolidation in the consumer storage space.

Andrew Nusca Special to CNET News
Andrew Nusca is the editor of SmartPlanet and an associate editor at ZDNet. He has written for New York, Men's Vogue, Popular Mechanics, and Money. He is based in New York.
Andrew Nusca
2 min read
LaCie Little Big Drive
Seagate is seeking a controlling stake in French rival LaCie, which makes the Little Big Drive. Stephen Shankland/CNET

If you can't beat 'em, buy 'em.

Storage manufacturer Seagate announced today that it is seeking to purchase a controlling stake -- 64.5 percent -- in consumer rival LaCie.

If approved by regulators, Seagate would then make an all-cash offer for the French company's remaining outstanding shares. LaCie Chief Executive Philippe Spruch would lead Seagate's consumer storage products organization.

Cupertino, Calif.-based Seagate's interest is fairly straightforward, and the companies are complementary from the standpoint of sales channels and retailer relationships. (Although LaCie sells its wares across the globe, including in the U.S., its strongest position remains its home market: 61 percent of the company's sales are in Europe, the Middle East, and Africa.)

From a product point of view, LaCie's lines of direct-attached storage, network-attached storage, and software should absorb rather cleanly into Seagate's extensive portfolio of consumer products. (The American company also makes desktop and enterprise drives.) And then there's the benefit of buying a rival chief executive and all the engineering, product, and marketing talent beneath him.

Seagate has previously expressed a desire to grow its consumer storage presence, particularly in Europe and Japan; buying a 25-year-old French company seems like a good way to accomplish that.

But there's more at play here. The Seagate-LaCie deal shows accelerating consolidation in the consumer storage space as more and more data moves to the cloud and margins for direct-attached drives (e.g. USB, FireWire) thin to razor's edge levels.

Seagate is positioned well for this; with a bit less than half of the drive manufacturing business -- the rest split between Western Digital and Toshiba -- it's got the supplier side of things on lock. But as network-attached storage becomes the next big thing for consumers (and small and medium-sized businesses, frankly), the battle will heat up around software, usability, and -- if all else fails -- brand differentiation. And that's where design-forward LaCie comes into play.