Posted by: Olga Kharif on December 21, 2005
I am posting the entry below for Cliff Edwards, who is out of the office:
A few months ago, execs at hard drive makers Seagate and Maxtor insisted they weren’t worried about the sudden shift in sentiments toward flash-based memory. Now comes word that Seagate is buying rival Maxtor in an all-stock deal worth $1.8 billion. The two in a statement used the dreaded word, synergies, to describe why they’re making the move.
Let’s face it, though, there has to be concern about the suddenly explosive market for NAND flash. Samsung, Toshiba and SanDisk are running all-out to supply consumer electronics markets and consumers with memory cards and storage for digital music players and the like. And now that Intel has finally cried uncle and jumped into the market in partnership with Micron, we should expect that flash will make its way into pcs in short order. That’s got to be giving the hard drive makers the willies.
Sure, hard drives will continue to thrive for their massive storage capacity, which flash memory right now can’t compete with. But in a few years’ time, as costs come down for flash and densities get higher, NAND is likely to make a huge dent in hard drive sales. It’s probably an inspired move now, then, that Seagate is moving to get ahead of the curve on lowering its own costs by taking a chief competitor out of the market.