With Storage Giants Getting Bigger, Will Prices Stay Small?

By Donald V. Morris

Even with big buyouts like Western Digital and SanDisk, hard drives and flash remain cutthroat businesses
Hard-drive giant Western Digital’s planned acquisition of SanDisk is just the latest of several deals that could reduce the number of companies making storage gear. Will this trend eliminate choices and let manufacturers raise prices?
No, according to analyst Jim Handy of Objective Analysis. Buying hard drives and flash won’t get harder or more expensive, precisely because selling them will remain a cut-throat business for the foreseeable future, he said.
The proposed US$19 billion buyout, expected to close in the third quarter of next year, came less than two weeks after another big storage-related deal in which Dell plans to buy EMC for $67 billion. Storage silicon maker PMC-Sierra is still weighing multiple offers. And Western Digital has already helped to drive consolidation by buying Hitachi GST in 2011.
But Western Digital isn’t buying SanDisk to become a bigger, more efficient maker of HDDs (hard disk drives). Instead, it wants SanDisk’s core flash storage business to complement its own spinning disks. The three big suppliers of hard drives — Western, Seagate and Toshiba — will still be standing if the deal goes through.
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