The MacBook Air, heralded earlier this week for its ultra-thin 0.68-inch profile and lack of any hard disk drive, is putting a knife in the back of drive makers. That’s the word from one company hurrying to move from dinosaur drives to a flash memory future.
“The new announcement of the MacBook Air is really stabbing Seagate and Western Digital in the back,” LacCie CEO Philippe Spruch, told the Wall Street Journal. The French-based Lacie is transforming quickly into a flash-based firm. The MacBook Air, instead of a hard disk drive uses flash for storage and a read-only memory card for installations. Who are the winners and losers in the storage upheaval?
Hard drive manufacturers see the writing on the wall – and its mostly bad. Western Digital’s recent quarterly net income fell 32 percent on revenue rising just 8.5 percent. Fellow platter-pusher Seagate is even talking going private as its net income fell 17 percent with revenue up just 1 percent.
At the other end of the spectrum, companies such as SanDisk, which make flash memory, are experiencing double-digit profits and revenue. SanDisk reported Thursday 39 percent growth in profits as revenue jumped 32 percent. Flash memory manufacturers have a bright future as laptops, such as the MacBook Air and the thin iPad soak up the available flash memory. Indeed with the iPod, iPhone, iPad and now MacBook Air all using flash memory, Apple CEO Steve Jobs says his Cupertino, Calif. company has become that sector’s biggest customer.
Unlike in previous years, when every computer manufactured or repaired needed a hard drive, storage makers must now seek out companies like Apple in order to thrive. Developing close ties to computer makers and harboring a library of profitable patents will be needed in the future, SanDisk CEO Eli Harari told the newspaper.
Hard Drive makers have a chance to avoid the fate of the floppy disk by remaking their market. Already, the brands known for hard drives are positioning themselves as a storage accessory, providing terrabytes of space for the never-ending accumulation of digital data. The other potential hope for hard drives: a spike in memory prices.
[via Wall Street Journal]