Seagate Technology PLC (NASDAQ:STX) is a leading provider of electronic data storage products such as hard disk drives for personal storage and enterprise applications. Its main products are hard disk drives or HDDs, which are the principal medium of mass data storage. Seagate manufactures electronic data storage products addressing a broad spectrum of clients such as enterprise applications, client compute applications and client non-compute applications.
In the enterprise application market, its products are designed for servers, mainframes and workstations. The client compute application products are the primary storage for desktop and notebook computers and are sold to laptop manufacturers. In the client non-compute application product line, products are designed for a wide variety of personal and end user devices such as cameras, digital video recorders, gaming consoles, personal data backup systems, portable external storage systems and digital media systems. It also provides data storage services for SME’s which include online backup, data protection and recovery solutions.
We have broken down Seagate into three divisions:
1) Enterprise and Cloud Storage
2) PC, Tablet and Laptop Storage
3) TV, DVR, Consoles and External Storage
Business Snapshot
1) The Enterprise and Cloud Storage division caters to businesses and institutional clients and its solutions are designed for mission critical applications. Mission critical applications are applications that are vital to the day-to-day operations of an enterprise, and these solutions require high performance and highly reliable storage solutions. These are also high capacity storage devices and have around-the-clock support.
The market for mission critical enterprise storage solutions will continue grow as enterprises try to save energy costs and reduce network complexity by moving network traffic to dedicated storage area networks. These solutions are high performance enterprise class disk drives with sophisticated firmware and communications technologies.
2) The PC, Tablet and Laptop storage division, or the client compute applications, are solutions designed for desktop, notebook and netbook storage applications. The growing demand due to growing economies and the continued proliferation of digital content are the primary drivers of the client compute market. One of the factors mitigating this growth is the advent of storage of digital content in the cloud. Many client compute applications now require less built-in storage (such as tablets and Ultrabooks) and SSDs are becoming more competitive within the client compute market. SSDs are also becoming more competitive as mobile computing devices such as netbooks and Ultrabooks are transitioning to smaller and thinner form factors, which can be served only by the SSD market.
3) The TV, DVR, Consoles and External Storage, or client non-compute applications, are storage solutions designed for consumer electronic devices such as media recorders and disk drives used for external storage such as a portable external disk and network-attached storage (NAS). Consumer electronic storage devices are used in applications such as gaming consoles, DVRs and devices which require high capacity and low cost per GB. External and NAS devices are used in personal data backup and portable external storage to augment storage capacity in the consumer’s current desktop or notebook. Consumer electronics includes devices used to display media at home for personal media consumption. These solutions are being used to leverage the proliferation high definition and media-rich digital content.
We currently have a $33 Trefis Price Estimate for Seagate, which is in line with the market price. In a following article we explain key risks to our valuation, trends driving the company and storage industry as a whole and other key factors affecting our valuation of the company.
