Why do Western Digital buys STEC?




Why do Western Digital buys STEC?

Western Digital

On the technology market continues series of mergers. Major Corporations easier to keep afloat in the stormy ocean of high technology. June 24, 2013 the famous hard drive manufacturer Western Digital (WD) in an official press release said that the agreement to acquire the company STEC approximately 340 million U.S. dollars. The procedure for the approval of this acquisition will take some time. The main activity of the acquired company: Solid State (SSD) drives, which today are replacing the traditional notebook hard drive. This only proves one thing: Western Digital wants to play in the market SSD prominent role. SSD-drives are one of the forms assumed by flash memory, the principles of which our readers are already familiar .

STEC Western Digital is not acquired directly, by HGST (Hitachi Global Storage Technologies), which in turn was bought by WD little over a year ago. HGST is known for its line of SSD-drives ULTRASTAR. At the same time, under its own brand Western Digital Solid State Drives are not issued.

Columnist known resource AnandTech Christian Watteau (Kristian Vättö) in his article devoted to the subject, has expressed the view that this merger is beneficial for both companies. STEC for a long time was in financial difficulties. Its largest shareholder, Balch Hill Capital, at one time made a public statement that the company’s time to look for a buyer. STEC is one of the oldest players in the SSD-drives. Despite the company’s history, in recent years its profits steadily declined. Part of the reason for that was more powerful competitors such as Intel, Samsung, and Toshiba.

Today the company is difficult to rely on a steady supply of modules NAND (the underlying solid-state drives), if it does not have its own production facilities. Yes, and “weather” in the NAND market is expected next year, “cloudy”: instead of having to increase the volume of production, market players are in the search for maximum profit. Western Digital did not have their own factories, producing NAND-ins.

The main benefit from Western Digital acquired it lies in the plane of intellectual property and the talented engineering staff at the disposal of STEC. This company employs 900 people and its (relevant to SSD) patent portfolio consists of more than one hundred patents.

HGST is working on a SSD-controller, together with a giant chip maker Intel, which has played a key role in the history of microprocessors . Joint activities will continue, but – after the acquisition of STEC – HGST acquires a greater degree of independence in their work on the SSD-drives. Thus, there is the prospect of the company to strengthen its position in the market.

Of course, the fruits of this merger, will hit the market at once. But Western Digital, through this acquisition, it is possible to more confidently assert itself on the market SSD. First of all we are talking about the drives for corporations, but we can not rule out the likelihood of SSD-drives consumer-branded Western Digital and HGST. Gradually, solid state drives occupy the hierarchical level in the pyramid of computer memory, which for many years was owned primarily hard drives.

According to the materials anandtech.com
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Tags: SSD , Western Digital , Flash memory .

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