Western Digital Offers A Personal Cloud To Consumers

by Trefis Team
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WDC
Western Digital
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Western Digital Corporation (NASDAQ: WDC) launched My Cloud, a personal cloud storage drive, earlier this quarter to expand its Network Attached Storage (NAS) offerings beyond enterprises to individual customers. [1] My Cloud, a backup and unified storage solution for a single user or for a family to store data “in house”, is accessible across all devices including laptops, personal computers, tablets and smartphones across platforms such as Android, iOS and Windows. Additionally, the company expanded My Cloud brand to include a high performance four-bay cloud storage system, targeting professionals and small work-groups that require massive amounts of digital data. [2]

Over the last few years the number of PC and laptop units shipped have steadily declined, largely due to an increased dependence on cloud storage as well as competition from tablets. The personal cloud platform provides a perfect opportunity for storage companies to increase spending from the consumer side. Additionally, the cloud storage segment of storage companies is no longer restricted to enterprise storage solutions. We have an $80 price estimate for the Western Digital which is slightly below the market price. The personal cloud should help the company increase sales in the consumer section by helping users transition from regular hard drives to the personal cloud, but may not provide a significant upside to our estimate.

See our full analysis on WDC here

Personal Cloud

Personal Cloud is a relatively new concept in the world of storage as it offers consumers a choice to access data saved at a common place, from all personal devices such as laptops, tablets and smartphones. This is different from regular cloud storage since the stored data drive is present “in-house” or physically present with the user.

Compared to publicly available cloud storage options such as Dropbox and Skydrive, the personal cloud offers a significantly greater storage space to users. Unlike Dropbox and Skydrive which have paid subscriptions beyond a few gigabytes (GB) of storage and limitations on the size of data files to be stored, there are no storage charges or limitations on data usage for the personal cloud. In a lot of cases, users end up making multiple accounts on Dropbox to get as much free space as possible, but all their data cannot be synced or accessed all at once. Additionally, the restriction on the size of files (300 MB in case of Dropbox) in free accounts makes it nearly impossible to store a lot of media files such as movies or videos. Furthermore, when the personal cloud storage is accessed on the same network where it is physically present, it uses intranet, which is generally much faster than accessing data via the internet. The personal cloud is a one-time investment that provides a unified backup for all the data that a single user or a family might require. It is available in capacities of 2-4 terabytes (1 terabyte = 1000 gigabytes).

There has also been skepticism by the general public about stored data on public clouds. This came into greater perspective with the revelations made by former NSA contractor Edward Snowden about the NSA monitoring public data. [3] The personal cloud is likely to make users feel more secure about their data, and storage companies intend to capitalize on that sentiment.

Western Digital’s My Cloud

With an aim to provide ease of use to end users and cut down storage costs, Western Digital launched its My Cloud drives earlier this quarter. Buying a 2-4 terabyte (TB) drive accessible from multiple devices for $150-$210 is significantly cheaper than paying $40 per month to Dropbox for 500 GB of storage. However WDC’s My Cloud has been preceded by Seagate’s (NASDAQ:STX) Central and Toshiba’s Canvio Personal Cloud drive, with Lenovo’s Beacon Cloud Storage now following suit. Given the competition in this segment already, prices of the personal cloud should stay low.

The personal cloud is a logical alternative to fast declining external hard drives. The gains in revenues from personal cloud are likely to be at the expense of regular external and internal hard drives as well as solid state drives for PC and laptops. However, My Cloud could give a stiff competition to the Seagate’s wireless drives, which are in concept similar to the personal cloud. Wireless drives provide a unified storage and backup option for users just like the personal cloud but are only accessible over the same network and cannot be accessed devices via the internet.

Seagate has invested in wireless drives as well as Seagate Central, the personal cloud. The higher flexibility offered by the personal cloud should cut down demand of Seagate’s 1TB wireless drives. Read more on how SanDisk’s portable wireless storage with low storage capabilities is a better option for smartphones and tablets. Like SanDisk’s (NASDAQ:SNDK) wireless storage solutions, the personal cloud could also reduce the number of users paying a premium of about $100 for a memory expansion of 32/64 GB on tablets or smartphones.

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Notes:
  1. Western Digital Gives Consumers Cloud Of Their Own, Western Digital Press Room, October 2013 []
  2. WDC Expands My Cloud Family, Western Digital Press Room, November 2013 []
  3. Is Personal Cloud As Disruptive As The Personal Computer, Information Week, December 2013 []
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  • commented 8 months ago
  • tags: STX WDC SNDK
  • I love DropBox and have used it for years both personally and in a business environment. The biggest challenge that they face is they provide a service that is easily replicated by any number of companies, including powerful ones like Google , Amazon and Microsoft. The services are a dime a dozen right now and they way I see it, there are two things that can set a company apart: 1) tight integration with multiple platforms and 2) lots of storage space. Dropbox is doing a great job on the integration front. It couldn't be much easier to use, whether on a Mac, PC, or cellphone. But right now, they are getting pressure on the storage space issue. I keep getting emails that Norton wants to give me 50GB and Google wants to give me 100 MB. So right now I am making the switch to a product by Barracuda called Copy. They start you out with 20GB of space (more than I have on DropBox after years) and with referrals of 5GB a pop it can go quickly from there. Check it out at https://copy.com?r=BlX7tm.