Why Netbooks are good for Seagate

LAS VEGAS--When Acer and Asus first started pushing Netbooks, it was all about flash memory. But now, a majority of the small, Atom-powered notebooks have hard drives. And Bill Watkins, chief executive of hard drive market leader Seagate, likes it that way.

Seagate CEO Bill Watkins at CES 2009.

(Credit: Erica Ogg/CNET)

When the two Taiwanese Netbook makers first talked with Seagate about the category, they told Watkins they didn't need storage for their tiny Atom-powered, Linux-based Netbooks since they'd be used only for surfing the Web and all data would be stored in the cloud.

Just two years later it's a totally different story. Besides more customers preferring Windows XP, Seagate says probably one in four Netbooks now have solid-state drives, and the rest are good old-fashioned mechanical drives.

"For us, it's a big win, since we can sell a lot of drives then," Watkins said in an interview here at CES. "Everyone tries to low-end storage, but they can't get away with it."

Not that he thinks the Netbook is all that great an idea for PC makers. Most of them dismiss the idea that Netbooks will cannibalize traditional notebooks, as Dell did earlier Friday at its press event. At that, Watkins scoffs. "It's a low-end notebook. And it's just chewing into the $800 notebook market," he said.

Seagate's chief is known for being rather frank in his opinions, and his take on this year's CES was no different.

Regarding the much-buzzed about Palm Pre, Watkins says the company nailed it. "It's a better iPhone. It's taking the things the iPhone doesn't do well and improving them," he said, like a physical keyboard instead of a virtual one.

And a trend he likes is pico projectors. Not for the actual gadgets themselves, but the idea that people are finding ways to get content off their devices in new ways. The form factor itself isn't ideal.

"Why would you want to carry an extra device around?" he asks. "Once they're integrated into devices, (pico projectors) will be cool. That's the next step of taking content off devices and finding different ways to enjoy it."

Seagate is here at the gadget extravaganza to push its consumer-oriented storage solutions, like the FreeAgent HD Theater device that allows media stored on an external drive to be connected by dock to both PC and TV.

Consumer storage is one of the only areas that's growing for Seagate. The PC ecosystem has been battered by the troubled global economy--the industry is expected to see negative unit growth in 2009, a first since the tech bubble burst in 2001.

As for Seagate, hard drive shipments were lower in December 2008 than September 2008, the first time ever, said Brian Dexheimer, the company's chief sales and marketing officer. But consumer storage devices like the FreeAgent drives have been the one bright spot, with sales rising 15 percent on the year.

The company, he said, is preparing for a "very conservative outlook" this year.