Report: Fujitsu to sell hard drive unit to Western Digital

Fujitsu is in talks to sell its hard disk drive business to Western Digital, according to a Japan-based report.

Western Digital is the second-largest hard disk drive maker in the world behind Seagate Technology. Fujitsu's HDD unit is ranked sixth.

Fujitsu would sell all of its plants--including those in Japan, Thailand, and the Philippines--for between 70 billion yen and 100 billion yen (approximately $660 million to $944 million), according to Japan's Nikkei news service.

This would be one of the largest business unit sell-offs for a Japanese electronics company, Nikkei said, adding that Fujitsu's hard disk drive business has been posting losses.

The deal would be finalized by the end of the year, according to Nikkei.

A Western Digital representative would not comment on the report.

Beyond the brutal price competition that is typical in the hard disk drive industry, there is a clear-and-present threat now from solid-state drives. Until this year relegated to digital camera and music player storage, solid-state drives are now making inroads--albeit small--in laptops, particularly ultraportables like the MacBook Air, Dell's new E4200 line, and Netbooks such as the Asus Eee PC.

Solid-state drive suppliers such Intel, Micron Technology, Samsung, and STEC are also beginning to target SSDs as replacements for hard disk drives in the enterprise.

[ikramerica--2008]

This is bad. We are getting fewer and fewer players in this market, and while capacity is going up, quality is going DOWN. It is unacceptable that the quality of storage is as low as it is, and decreasing competition will make it worse.

[ferricoxide]

Odd... I haven't really noticed any decline. Then again, I've tended to stick to brands that are consistently good.

[AppleSuxLeo]

And I`m selling my soul to Rock and Roll !
For those about to Rock...We salute you !

[::G]

Fujitsu only makes mobile (2.5") and server HDDs. The 2.5" space has been getting crowded lately: HGST, Toshiba, Fujitsu were the main players, but now Seagate, WD, and Samsung have joined in and snapped up market share. It's inevitable that one would have to bow out.

WD doesn't really make server-class drives -- although they claim to, they're still 7200 RPM SATA, which is decidedly NOT a real enterprise model -- so acquiring Fujitsu would bolster their efforts in enterprise and eliminate a competitor in mobile. Sounds like a good strategy to me as long as they can capitalize on the server business.

However, merging corporate cultures is painful, as survivors of the HGST/IBM and Seagate/Maxtor acquisitions can attest to.

Incidentally, Fujitsu is denying the Nikkei rumor...for now:
http://pr.fujitsu.com/jp/news/2008/10/2.html

[pugster]

Frankly, I am surprised that 2.5 price is not getting any lower because I am thinking that 3.5 drives cost more to produce than 2.5 ones. Thus Seagate and WD are taking advantage of it and is the reason why I would think they are making money. Hitachi is probably the next company to go because they are only making 3.5 drives which is unprofitable.

[::G]

pugster: What are you smoking? Search for "Hitachi Travelstar" -- HGST definitely makes 2.5" drives! Moreover, Hitachi GST is the market share leader in the notebook space! 3.5" drives can be profitable if done properly. WD has made money on this for a long time. Obviously you know very little about the HDD industry.