How Much Can Seagate’s HDD Revenue Grow Over The Next Three Years?

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Seagate Technology’s (NASDAQ: STX) HDD (hard disk drive) revenue will likely decline at an average annual rate of 2.1% from $10.60 billion in fiscal 2018 to $9.94 billion in fiscal 2021, according to Trefis estimates. This decline will likely be led by slower enterprise demand. Seagate is a storage company, and most of its revenues (around 90%) comes from HDD sales, unlike some of its peers, such as Western Digital, which also sell solid state drives (SSD). In this analysis, we compare Seagate’s HDD growth and performance vis-à-vis its primary competitor ~ Western Digital ~ and provide an outlook of the future course of business. You can view our interactive dashboard analysis How Much Can Seagate’s HDD Revenue Grow Over The Next Three Years? ~ for more details. In addition, you can see more of our data for information technology companies here.

How Much Has Seagate’s HDD Revenue Grown Since 2016?

  • Seagate’s HDD sales grew from $10.20 billion in fiscal 2016 to $10.60 billion in fiscal 2018. This represents a 2.3% average annual growth in revenues (2016-2018).
  • In terms of volume, the company sold 338 exabytes in fiscal 2018, as compared to 234 exabytes in fiscal 2016.
  • Average capacity per drive also increased from 1.4 terabytes to 2.2 terabytes during the same period.
  • This can primarily be attributed to strong demand for the higher capacity drives in the server market.
  • Data center customers prefer HDD over SSD, given its pricing is more attractive, and this has aided the sales growth for Seagate in the past.

What Factors Could Impact The HDD Sales Over The Next 3 Years?

  • The decline in the near term can largely be attributed to lower enterprise storage products sales, given softer enterprise demand.
  • The global server market grew 5% in 2018, and it could see a slowdown in 2019, given the expected launch of new processors in the near term.
  • Some of the cloud clients are anticipating the transition to high capacity drives.
  • Traditional PC market hasn’t seen any major growth in the recent past, and this trend will likely continue in the near term, thereby impacting the demand for HDDs.

How Does Seagate’s Growth In HDD Compare To Western Digital?

  • Seagate’s HDD sales grew at an average annual rate of 2.3% since 2016. This was better than the growth for its prime competitor ~ Western Digital.
  • Western Digital’s HDD sales declined at an average annual rate of 2.9% from $11.25 billion in fiscal 2016 to $10.60 billion in fiscal 2018, and they could grow in low single-digits on average over the next few years.

How Has Seagate’s Share In the Global HDD Market Trended In The Past, And What Lies Ahead?

  • Global HDD total available market declined at an average annual rate of 4.7% from 432.3 million units in 2016 to 392.7 million units in 2018.
  • However, Seagate saw a growth in sales during the same period. As such, it gained market share from 38.7% in fiscal 2016 to 39.1% in fiscal 2018.
  • Looking forward, the overall market could decline in the near term, given the trends on enterprise side. Seagate will likely see a loss in share to other players, such as Western Digital, which could see faster growth as compared to Seagate, given it has a wider range of product offerings.

 

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