Western Digital Unveils Most Power-Efficient Enterprise HDDs

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Western Digital Corporation (NASDAQ:WDC) recently introduced a new lineup of high-capacity enterprise grade hard disk drives (HDD). The manufacturer added to its WD Re+ range of enterprise drives, marketing them as the most power-efficient enterprise hard drives currently available. [1] The 3.5″ form factor 6 terabyte (TB) hard drives consume as little as 6 watts of power per drive, which is about 40% lower than its existing WD Re and WD Se range of high-end enterprise hard drives. The company had a lackluster 2014 in terms of enterprise hard drives sales, with unit shipments stagnating compared to the previous year. The newly introduced hard drive could boost unit sales in the coming quarters and help the company defend its market share against competitors such as Seagate (NASDAQ:STX). In this article we take a look at Western Digital’s efforts to rekindle its enterprise storage division with the new launch. According to our estimates, the enterprise and cloud storage division makes up about 36% of our $104 price estimate for Western Digital’s stock. Our price estimate is slightly higher than the current market price.

See our full analysis of Western Digital here


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WD Re+ Enterprise Hard Drives

Western Digital’s enterprise storage division caters to businesses and institutional clients with its storage products designed for mission critical and nearline applications. The market for mission critical enterprise storage solutions has grown at a rapid pace over the last few years, as cloud-based storage has shifted consumers away from storing data locally. Additionally, the number of data centers which need to maintain backups of data and information on servers, and large businesses that require high-end data storage, has risen significantly over the years. Accordingly, enterprise-grade hard drives are manufactured to withstand high workloads and deliver optimum performance for long periods of time. Western Digital’s enterprise and cloud storage division includes hard drives sold by the company under the WD banner such as WD Se, WD Re, WD Ae, and well as hard drives sold by its subsidiary HGST under the Ultrastar brand name.

Within the WD range of enterprise drives, the 6TB drives in the Se and Re categories consume about 7.5 watts of power in idle mode going up to 10.5 watts of power in random or sequential read/write operations. [2] [3] On the other hand, the 6TB WD Ae drives consume 4.8 watts in idle mode going up to 6.5 watts in sequential write operations. [4] One of the key reasons why the Ae drives consume less power is because they spin at a lower RPM (~5,800 RPM compared to 7,200 RPM for Re/Se drives). The newly introduced Re+ drives spin at 7,200 RPM, yet consume only 6.2 watts of power for sequential write operations giving optimal performance at maximum efficiency. [5] Moreover, the Re+ drives can operate workloads of up to 550 TB per year, compared to under 200 TB per year handled by standard enterprise drives. The tested mean time between failure (MTBF) for these drives is as high as 1.2 million hours, compared to about 500,000 – 1 million hours for standard enterprise drives. Western Digital’s enterprise drives also include Helium-filled drives, which the company introduced in late-2013 under the brand name Ultrastar. These drives are sealed with helium in them instead of air, which vastly reduces turbulence/friction inside the drive once the disks are in operation and start spinning. As a result, they can potentially reduce the total power consumption by about 25%. [6]

Impact On The Enterprise Storage Division

Western Digital shipped out 6.1 million enterprise-grade storage units in calendar year 2009, which has risen to 30.6 million units shipped in 2013. Comparatively, the number of unit shipments stagnated in 2014 with just over 30 million units shipped during the calendar year. On the other hand, Seagate shipped 33 million enterprise hard drives in 2014, up from 31.6 million in 2013. Contrary to the consistent growth rate in net shipments for Seagate, a recent research report by cloud service provider Backblaze highlighted that Seagate’s enterprise hard drives fail at a significantly higher rate than Western Digital or WD-owned HGST hard drives. [7]

With an extra emphasis on low power consumption, Western Digital management expects the total cost of ownership of large-scale deployments to decrease by as much as a few “millions of dollars” annually. [8] Moreover, the important metric to evaluate cost savings in this case is a watt-per-gigabyte ratio rather than the cost of storage on a traditional price per GB basis. The Re+ range of drives claim to have a leading industry-wide watt-per-gigabyte ratio which makes them an ideal long-term cost-sensitive solution for data centers and enterprise customers. According to data compiled by research firm ReportsnReports, the global enterprise storage market is expected to grow at a CAGR of over 15% from 2015 through 2019. [9] The growing demand for high-end storage drives, a superior product line up, an improvement in customer mentality and the benefits of low power consumption could drive Western Digital’s unit shipments in the coming years.

We currently forecast Western Digital to sell nearly 60 million storage units by the end of our forecast period, with unit shipments rising gradually over the next couple of years before resuming the historic growth rate. If the unit shipments surge to about 40 million units through 2015 and subsequently rise at a more gradual pace to about 60 million units by the end of our forecast period, it could imply a 6-7% upside to our $104 price estimate for Western Digital’s stock. You can modify the interactive chart below to gauge the impact changes in enterprise and cloud unit shipments for the company’s enterprise storage division will have on our price estimate for company.

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Notes:
  1. WD Introduces World’s Most Power-Efficient, High Capacity Datacenter HDD, Storage Review, March 2015 []
  2. WD Re Data Specifications, Western Digital, March 2015 []
  3. WD Se Data Specifications, Western Digital, March 2015 []
  4. WD Ae Data Specifications, Western Digital, March 2015 []
  5. WD Re+ Data Specifications, Western Digital, March 2015 []
  6. Helium-Filled Drive Total Cost of Ownership, HGST, March 2015 []
  7. Hard Drive Reliability Update, Backblaze, September 2014 []
  8. Western Digital debuts ‘world’s most power-efficient’ high-capacity 3.5-inch HDD for datacenters, ZD Net, March 2015 []
  9. Global Enterprise Storage Market 2015-2019, ReportsnReports, January 2015 []