Hitachi GST CEO claims hard drive future hangs in Cloud

Hitachi GST CEO claims hard drive future hangs in Cloud

Officials discuss plans for combined Western Digital-Hitachi GST after deal closes later this year

In March, Western Digital agreed to buy Hitachi Global Storage Technologies (HGST), the disk drive subsidiary of Hitachi Ltd., in a stock and cash transaction valued at $US4.3 billion. HGST CEO Steve Milligan will join WD as president at the closing of the deal, expected in the fourth quarter.

Western Digital is the leading supplier of hard disk drive technology, controlling about 31 per cent of the market, followed by Seagate Technology with 29 per cent. HGST's business represents about 18 per cent of total hard drive units shipped, according to market research firm iSuppli. The combined firm will handily dominate the market.

The buyout will give Western Digital, a company focused mostly on the consumer external hard drive segment, a greater foothold in the data center. Milligan and Brendan Collins, HGST's vice-president of product marketing, spoke to Computerworld about the post-closing future.

Where does HGST's future lie?

Steve Milligan: HGST was started back when Hitachi acquired IBM's disk drive business in 2002. Unfortunately, it had not been successful from a financial perspective ... it incurred a substantial amount of losses. As the disk drive industry got more cost competitive [IBM] felt they couldn't compete effectively. That was the business we inherited.

The thing we recognized was that data storage requirements were going to increase. The only question was: Where was that data going to be stored and where was the opportunity to make money and come up with unique solutions that allow our customers to be successful? We saw a huge opportunity in terms of two things -- the build out of the Cloud ... and mobility. Those two things work together.

Hard drives appear to be dead in the mobile market. Where do you see a future for 7mm disk drives in mobile devices.

Collins: Well, I wouldn't say for a second that it's dead. I think you need to look at the use of our 7mm drives in several markets -- notebooks ... smaller set top boxes ... and portable storage.

If you look at the biggest market -- the notebook market -- and look at client SSDs versus hard drives, even three to five years from now, SSDs will be less than 10 per cent of the mix. You'll probably see a combination including hybrid drives that blend flash and hard drives.

If you look at the [drop in cost] of flash and hard drives, we're both on a similar trend. We're on roughly a 25 per cent [cost per gigabyte reduction annually] in both MLC flash and hard drives. So the gap really isn't closing. You're going to see both of those offerings continue to exist for quite a while. And, most of our big [systems equipment manufacturers] agree with that.

Milligan: I think where you're correct in that there are alternative devices that are consuming data and utilizing flash memory as opposed to notebook devices that may be using hard drives.

We've really tried to run hard towards the Cloud. If we were to sit back and say our growth opportunity is in traditional compute platforms that use hard drives, we would be wrong. Are there still growth opportunities there? Yes. Is it more muted than in the past? Yes, because of alternative devices consuming all this data. So where we really see the value creation ... is the evolving storage ecosystem that's been moving to the Cloud.

Will notebooks even be around in five years with tablets growing the way they are. Collins: If you look at emergence of edge devices, which would include smartphones and iPads, you cannot put all your photos or your music on there. You tend to put it on there temporarily, which means mass storage device tends to be somewhere else. These [smartphones and tablets] tend to be complementary devices, not displacing primary storage devices like notebooks and desktops. It has clearly had an impact on the growth of notebooks, but they will continue to co-exist.

If someone were to ask me: "Are you threatened by smartphones; are you threatened by tablets." My answer would be no. All of those drives have a greater need for data. All those things that drive a greater need for data are good for us fundamentally as an industry. Still, the preferred option for mass storage is rotating magnetic storage. All that data has to be somewhere. There's going to be a big fat drive out there somewhere storing all that stuff.

So the strategy is to be the disk drive supplier to Cloud service providers?

Milligan: Will everything eventually move to the Cloud? A lot of it will, but a lot of it will not as well. What you'll find is there are a lot of bandwidth problems that will take years and years and years to resolve. And, there's a lot of privacy and security concerns with putting everything out there. So a lot of people want that remote access in the Cloud, but they also want their personal Cloud at home. So, I think they're going to co-exist.

And so how do the Cloud and mobile markets fit together for you?

Brendan Collins: That's where we get into things such as tiered data strategies we have. It's not just a plug-and-play world. It requires a much more collaborative, almost consultative approach, with our customers.

And, by the way, our customers are changing. It's not just the traditional big manufacturer selling a rack of storage to BofA. It's the social media and search companies that are designing their own unique systems that meet their own unique requirements. Storage of data is central to what they do, therefore how we fit into that ecosystem is changing and we've got to kind of meet that requirement as opposed to being the guy who's shoving their storage into a rack and then selling it and everyone looks the same.

Milligan: We've seen the Wintel architectures dominate for the last 10 to 12 years. Now you're seeing ARM processors, and Apple OS and Android OS and virtualization and hyper-scale Cloud datacenters. They're driving new workloads and architectures. Along with those come new opportunities. We're moving away from standardisation and toward opportunistic technologies. For example, if you look at the data centers today, two fundamental building blocks in the data center going forward are three tiers: tier zero SSD, the small form factor performance drives and the big fat bulk storage drives.

How are you different from other disk manufacturers?

Milligan: Today, we're the preferred supplier to all the big public cloud guys out there. And, we're launching SSDs . We have a common architecture that plays across all of those tiers. Imagine you're a big storage OEM or a big users company and you have to buy an SSD from company A, a performance drive from company B and another drive from C, you're whole software investment, your whole RAID stack has to be adapted to all these different classes of products.

Lucas Mearian covers storage, disaster recovery and business continuity, financial services infrastructure and health care IT for Computerworld. Follow Lucas on Twitter at @lucasmearian, or subscribe to Lucas's RSS feed . His e-mail address is

Read more about storage in Computerworld's Storage Topic Center.

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