Six months after losing the top spot in the global hard
disk drive (HDD) segment due to the Thai flooding disaster,
Western Digital in the second quarter recovered its market
lead from chief rival Seagate Technology, according to
Western Digital produced approximately 71.0 million HDD
units in the second quarter, including production from
Hitachi GST, a company acquired by Western Digital earlier
in the year. Revenue for Western Digital amounted to $4.8
billion - a company record.
In comparison, Seagate shipped 65.9 million HDD units
during the same period, with revenue reaching $4.5
billion - also a record in Seagate's books.
"Western Digital lost its No. 1 unit shipment ranking to
Seagate in the fourth quarter of 2012 after flooding in
Thailand damaged its HDD manufacturing facility," said Fang
Zhang, analyst for storage systems at IHS. "The company now
has fully recovered from the disaster, allowing it to
sharply increase shipments of HDDs for notebook PCs, up 28
percent from the first quarter. Western Digital is on track
to retain the top spot in shipments and revenue for the
Total HDD shipments for the second quarter amounted to
157.0 million units, up 8 percent from 145.1 million in the
first quarter. Western Digital enjoyed the biggest
shipments share at 45 percent, followed by Seagate with 42
percent and Toshiba with 13. Total HDD revenue for the
second quarter hit $10.3 billion, compared to $9.6 billion
in the first quarter.
Seagate, the market revenue leader for most of the time in
the past decade, is forecast to sit in the runner-up spot
again in the third quarter. Despite its fall to No. 2 in
the second quarter, Seagate is the leader in the desktop,
enterprise and non-PC segment, such as consumer
Gross margins continued to remain high for both Western
Digital and Seagate, indicating flush results, despite
being a small decline in the second quarter.
Western Digital's gross margin of 31 percent was 1 percent
lower than in the first quarter, but still much higher than
the previous record of 26.2 percent, seen some time ago in
the fourth quarter of 2009.
The slight decrease in margin was likely caused by pricing
pressure three weeks before the end of the second quarter.
Seagate's gross margin, in comparison, fell to 33 percent,
down from 37 percent, but also still in better shape than
the pre-flood level of 19.3 percent. Part of Seagate's
lower margin was the result of product-specific concerns,
such as noise issues in some desktop HDDs as well as
contamination problems with some mission-critical
enterprise HDDs. Both required a rework on Seagate?s part,
adding to costs. The company says the matters have been
resolved, however, and third-quarter margins should remain
in the 30 percent range.
The tussle between Western Digital and Seagate - one of the
historic continuing rivalries in the technology industry -
is not about to ease up anytime soon. In particular, the
fourth quarter will be a tossup, and the industry champion
by then will depend on how well each company executes for
the remainder of the year, coupled with the market
performance of enterprise and consumer PC solutions on
which hard disk drives depend.
The third player in the HDD storage segment, Toshiba of
Japan, produced 20.1 million HDD units and posted
approximately $1.1 billion in revenue in the second