In October of last year, Western Digital announced plans to split into two separate entities. As the split becomes imminent, experts see little impact on the overall market, but the vendor and its customers are expected to benefit.
Under investor pressure, the company will separate, with HDDs keeping the Western Digital name and the new flash company spinoff with a still unknown name. Another unknown is the exact timing, but WD has said the split is on track for later this year.
While this is a big shake-up at one of the three major HDD-makers, analysts don't expect there to be a huge change to the HDD market.
Founded in 1970, Western Digital started out making calculator chips before it got into the storage business a decade later, mainly focused on controllers. In the 1990s, WD began to manufacture HDDs, which it is more known for today, and added SSDs in 2009. In 2016, WD acquired SanDisk and expanded its SSD lineup. Now WD is looking to essentially undo that acquisition.
"No one company has ever managed flash and HDD together successfully," said John Chen, an analyst at Trendfocus.
While there appear to be similarities between the two types of businesses, they are fundamentally different, Chen said. Flash is capital-intensive and volatile on pricing, and HDDs use more or less the same equipment to make newer, denser drives.
HDD market impact, or lack thereof
The split could be beneficial for the two new entities as it enables both to allocate capital to their main offerings, according to Ed Burns, an analyst at IDC.
From an HDD perspective, it would allow them to focus on that business entirely, without distractions from the flash market.
Ed BurnsAnalyst, IDC
"From an HDD perspective, it would allow them to focus on that business entirely, without distractions from the flash market," he said.
The reduction in scale of the company could also renew focus, Burns said.
Chen agreed, stating that removing the volatility of the flash side eliminates a financial burden. This will give WD the direction it needs moving forward.
The flash market won't be massively changed by the split of WD either, but creating a separate company focused on flash could benefit individual customers.
With new management and renewed focus, the new flash company can improve its business in the enterprise space and be more beneficial overall, said Joseph Unsworth, an analyst at Gartner.
"You want to leverage what SanDisk has done very well," Unsworth said, "which is the brand, the distribution, the vertical integration, the focus on the PC and consumer space."
HDDs' dominance unchallenged
While the numbers aren't exact, the total amount of primary data stored on HDDs is still north of 85%, Burns said. And it looks like those numbers aren't changing soon.
"It's going to go down over time, but gradually," Burns said.
There is a notion that this new HDD business will run until hard drives go away, but they aren't going anywhere for an extended period, Chen said.
"I think a lot of focus is needed in the next half dozen of years to make technology transitions such as HAMR [heat-assisted magnetic recording]," Chen said.
New technologies require investment and engineering focus that WD will have, unburdened, going forward.
Consolidation, but not for HDDs
One thing that the split could lead to is further consolidation on the flash side. There have been rumors of a Kioxia and WD merger as far back as 2021. Spinning out of the flash business could raise the possibility of a merger, but there is no official word on that yet.
One area where there won't be consolidation is in the HDD business, experts agreed. There are three major players left -- Seagate, WD and Toshiba -- with no indication that they will consolidate in the near future.
Toshiba is the smallest of the three in terms of market footprint, but it is highly unlikely that either of the other two vendors will acquire them, according to Burns.
"It would be perceived as bad for the customers and anticompetitive," Burns said.
There is interest both for customers and governing bodies to keep three vendors in the market, he said.
However, there is concern over whether Toshiba, the smallest player in the HDD market, will execute on its role of providing competitive products, Chen said. All three HDD vendors are focused on capacity going forward and are executing on that goal.
"Customers love having three players because two presents less leverage in negotiations, and supply diversity becomes more of a challenge the more you consolidate," Chen said.
WD did not respond to a request for comment.
Adam Armstrong is a TechTarget Editorial news writer covering file and block storage hardware and private clouds. He previously worked at StorageReview.
