Maxtor-Seagate Deal Threatens Choices

By acquiring Maxtor, Seagate has eliminated one of its fiercest competitors and put itself in a good position going into the future.

2005 has been a big year for storage acquisitions and this 1.9 billion dollar transaction will affect many IT managers and consumers going into the future.

As weird as it is to say it, it’s actually a really interesting time to be in the hard drive market.

From a technology perspective, hard drive manufacturers have a couple of immediate challenges they need to take care of to remain competitive.

To combat the superparamagnetic effect, which limits the amount of storage density on a hard drive platter (a nice description of the superparamagnetic effect can be found here), hard drive vendors have already begun to develop and implement new perpendicular recording technologies to ratchet up platter densities.

Since the development of this technology is highly competitive and proprietary, every hard drive manufacturer on the market today has implemented its own brand of perpendicular recording technologies into its products.

Assuming a successful merger, the new and improved Seagate will be able to take the best technologies available to it to make a stronger line of products.

Read more here about Maxtor’s struggles with job cuts.

With the combined research and manufacturing resources of Seagate and Maxtor, Seagate should be able to find ways to expand storage density, while reducing manufacturing costs.

A second technological challenge that needs to be addressed is the emergence of SAS (Serial Attached SCSI), which is poised to replace Parallel SCSI as the dominant DAS (Direct Attached Storage) storage interconnect.

In the eWEEK Labs, over the last few months we have seen a couple of server systems from IBM and Sun arriving with SAS built into them, and from what we have heard from server vendors, we can expect to see most new servers in 2006 shipping with SAS controllers.

With this major shift to SAS, hard drive vendors will be rushing to demonstrate interoperability with storage system vendors and to ensure that their drives will be bundled into these systems.

Leveraging their combined marketing power and their business relationships throughout the world of IT, Seagate and Maxtor will be an attractive hard drive choice for server and storage vendors.

While I have a positive feeling about this transaction, the negative consequence of this merger is that it will be eliminating choice from consumers and IT managers.

The intense level of competition in the hard drive market today has given consumers and IT managers many different options for inexpensive storage and has spurred the creation of money-saving manufacturer discounts and rebates.

Hopefully this mega-merger will inspire competitors such as Hitachi, Fujitsu and Western Digital to up their game to ensure that the hard drive market will remain a buyer-friendly market.

eWEEK Labs Senior Analyst Henry Baltazar can be reached at henry_baltazar@ziffdavis.com.

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