How WD, Seagate and Toshiba ate the hard disk drive market

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There’s a lot of supplier consolidation going on – especially in established markets where economies of scale in production favour the larger operators. I recently covered Nokia’s acquisition of Alcatel Lucent and Atos’s – of Xerox’s ITO business. The same is definitely true in the hard disk market, where there are only 3 suppliers left – Western Digital, Seagate and Toshiba.

The Figure shows quarterly shipments by supplier between 2003 and 2015, underlying the dramatic changes in the vendor landscape.

You’ll want to learn more about who bought whom and how the market is performing now.

The businesses of the ‘3 last men standing’ have been formed through acquisition over a long time. I’ve summarised these in the Table.

Table: Western Digital, Seagate and Toshiba Acquirees and date

Seagate Western Digital Toshiba
Hitachi 2012* 2012*
LaCie 2012
Samsung 2011
Fujitsu 2009
Maxtor 2006
IBM 2002* 2002*
Quantum 2000
Conner 1996
Digital Equipment Corporation 1994
Plus Development 1992
MiniScribe 1990
CDC/Imprimis 1989
Tandon 1988

Note: some of Hitachi’s 3.5″ business went to Toshiba when the majority was bought by Western Digital

Source: ITCandor, 2015

Beyond these an extraordinary number of manufacturers have gone out of business. The full list according to Wikipedia is Alps Electric, Amcodyne, Ampex, Apple, Atasi Corp., Areal Technology, Aura Associates, Avatar Systems, BASF, Bryant, Burroughs, CalComp, Calluna Technologies, Century Data, Cogito Systems, Comport, CMI, Cornice LLC, Data General, Data Products, Data Recording Instruments, Data Storage International, Diablo Systems, DZU, Epson, Evotek, ExcelStor Technology, Fuji Electric, General Electric, Gigastorage, Halo Data, Hewlett-Packard, Hitachi Global Storage Technologies, Hokushin Electric Works, Honeywell Bull, Information Storage Systems, Integral Peripherals, International Memories, Iomega, ISOT, JT Storage, JVC, Kalok, Kyocera, LaPine Technologies, Marshall Laboratories, Matsushita, Memorex, Microcomputer Memories, Micropolis Corporation, Microscience International, Ministor Peripherals, Mitsubishi, NEC, Newbury Data Recording, Nippon Peripherals, Nomaï, Olivetti, Philips, Potter Instrument, PrairieTek, Priam Systems, Raymond Engineering, Rodime, Sagem, Seiko Epson, Sequel, Siemens, Sony, StorageTek, Syquest, TEAC, Texas Instruments, Tulin Corporation, Univac, Venturi International, Vertex Peripherals and Wang Laboratories.

disk shareAs for the 3 current market players, Western Digital (including its acquired  Hitachi Global Storage Technologies), Seagate and Toshiba have different market shares dependent on what you’re looking at, although the order remains the same. Western Digital was the leader with a 42% share of 565m unit shipments, 36% of the $42.6B revenues and 37% of the 664Exabytes shipped in the year to the end of March 2015. Seagate was in second place with 40%, 34% and 34% respectively, while Toshiba was in third place with 28%, 30% and 29%. I’ve been able to asses Western Digital and Seagate’s business, but have had to estimate Toshiba’s because it is yet to announce its financial results for the quarter and year ending in March.

disk ship capcityThe market has been somewhat sluggish in the last few quarters (see the Figure opposite): In Q1 2015 unit shipments grew 2% to 143M, while capacity shipped grew 11% to 139EB, while the value of hard disk sales actually declined 0.5% to $9.8B.

With all the noise being made about IoT and Big Data it seems somewhat strange that there isn’t more growth: perhaps it’s because there’s currently more demand for ‘high performance data workloads’, for which Solid State Disk and DRAM are the main offerings and less for ‘high capacity data workloads’ for which hard disks are the norm. Customers are enjoying the Moore’s law increases without having to spend more in a similar way to the x86 processor area. In addition better storage virtualisation is increasing utilisation and thereby reducing the demand for more drives.

chip and idsk profitSo, has it been a good idea to reduce the number of suppliers to 3? I’ve compared the profitability of a number of processor, NAND and hard disk suppliers in the Figure opposite. Both Western Digital and Seagate are doing OK, but arguably should be doing better given their dominant positions.

What conclusions can we draw? Our industry is full of innovation, but when a market becomes mature there’s an inevitable shakeout as economies of scale and mass production become the predominant forces. In networking we now have 4 main players, in x86 processors – only 2 and in hard disk drives just 3. We should try to sustain each of these players, because we will inevitably end up paying over the odds if/when the number goes down to 1.

As for the 3 hard disk manufacturers – they’re also innovating by changing connectors, adding ARM chips and diversifying into NAND production themselves. I’ll try to cover they’re movements as the market develops.

5 Responses to “How WD, Seagate and Toshiba ate the hard disk drive market”

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  1. […] its status as a full-range Japanese supplier. Toshiba has major assets as one of the last remaining hard disk manufacturers and it also has major opportunities in solid-state […]

  2. […] has major assets as one of the last remaining hard disk manufacturers and it also has major opportunities in solid-state storage. It could chose storage as its main IT […]

  3. […] each submarket – say Dell, HP and NetApp in storage systems, SK Hynix and Micron in SSD joining Seagate,Western Digital and Toshiba in the disk drive […]

  4. […] happening in the storage market. Despite having bought all the other manufacturers (see my earlier post), the hard disk drive market is not enough for Western Digital (WD), Seagate and Toshiba. The […]

  5. […] drive market is fully consolidated with just 3 companies holding 67% of its $17.0b 2016 value (see the bottom right of the Figure opposite, where a […]

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