Maxtor acquired by Seagata

[Dr Mordrid]

http://www.seagate.com/cda/newsinfo/newsroom/releases/article/0,,3183,00.html

SEAGATE TECHNOLOGY COMPLETES ACQUISITION OF MAXTOR CORPORATION

SCOTTS VALLEY, Calif.—22 May 2006—Integration to be Substantially Completed by Early Calendar 2007

EPS Accretion Target of 10-20% Confirmed

Seagate Technology (NYSE: STX) today announced that it has completed its acquisition of Maxtor Corporation. The combined company retains the Seagate name and continues to be listed on the New York Stock Exchange as "STX." Maxtor common stock has ceased to trade on the New York Stock Exchange.

The integration of former Maxtor operations into Seagate is expected to be substantially completed by early calendar 2007, with an earnings per share accretion target of 10-20% after the first year of combined operations.
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Adding to Seagate's own line of branded products, Seagate will retain a full range of Maxtor branded retail solutions. Maxtor is the leading brand name in the retail space and it will significantly strengthen Seagate's overall position in this burgeoning market. The combination of the two brands and the associated product lines represents the widest, most differentiated storage offering available to consumers today.

[KvHagedorn]

Too many mergers.. Oligopoly.

[MultimediaMan]

No, you don't have to worry about that:

http://www.crn.com/sections/breakingnews/dailyarchives.jhtml?articleId=188500694

It's all Seagate.

[schmosef]

Although I didn't hear about it until recently, this isn't a new story.

I was at a trade show about two weeks ago and had a conversation with a senior Seagate sales weasle (don't get me wrong, he was a nice guy, just describing his position). I told him that since Seagate only sells its hard drives though distributors who focus on retail boxes (Tech Data, Ingram, Synnex, Bell Micro), while they may own the server market, if they wanted to make inroads into the comsumer market they'd need to sell hard drives through distributors who specialize in OEM component sales (Supercom).

I told him that I wasn't going to buy everything BUT the hard drive from Supercom just so I could get a Seagate drive from elsewhere.

He agreed and said that after the Maxtor merger was complete (that's how I found out about it) they'd look into replacing what Maxtor sells through Supercom with Seagate drives.

I hadn't heard about the merger before so I asked him for details (actually, I remember thinking that Doc must have posted about it months ago and that I must have missed the thread). He told me it was public knowledge since December (that's what he said) but that it took this long to complete the deal.

Anyway, he was a high up guy and he said he bring it up at the next senior sales weasle strategy meeting. He gave us all nice pens. (Intel's pens were the coolest though!)

What surprised me in the article MultimediaMan linked is this quote:

“[Seagate] looked at Maxtor, saw they had the capacity and were screwing up prices, so they bought them,” he said.

Sounds decidedly anti-competitive to me. A 150GB 15K RPM Seagate SCSI drive costs just under $1000 CDN wholesale. I guess Seagate didn't want to have to lower their prices to compete with Maxtor, so they just eliminated the competition.

[MultimediaMan]

The funny thing is, they really won't be able to eliminate product lines for two years, I think.

Seagate SCSI drives command a premium, and IMHO they are worth it. Hitachi and Fujitsu both make very good SCSI drives as well...so does Maxtor, for that matter.

Maxtor is going to be a cash cow for them for quite a while...I would not be surprised to see them keep Maxtor in the Retail sector.

[Taz]

Maxtor ------\
              |--- Maxtor------\
Quantum -----/                  \
                                 |--- Seagate
Seagate -----\                  /
              |--- Seagate----/
Conner ------/

Who's next on the list

[Victorian]

Although I didn't hear about it until recently, this isn't a new story.

I was at a trade show about two weeks ago and had a conversation with a senior Seagate sales weasle (don't get me wrong, he was a nice guy, just describing his position). I told him that since Seagate only sells its hard drives though distributors who focus on retail boxes (Tech Data, Ingram, Synnex, Bell Micro), while they may own the server market, if they wanted to make inroads into the comsumer market they'd need to sell hard drives through distributors who specialize in OEM component sales (Supercom).

I told him that I wasn't going to buy everything BUT the hard drive from Supercom just so I could get a Seagate drive from elsewhere.

Huh? I've never bought a retail Seagate. Every one (around a dozen or so) that I've bought was a OEM drive.

[schmosef]

Huh? I've never bought a retail Seagate. Every one (around a dozen or so) that I've bought was a OEM drive.

That's my point. They sell largely OEM products through largely retail box focused distributors.

I told him it wasn't a good pairing for the consumer space.

Now for them, they've already got a certain position of market dominance so I guess it's not so important that they be well placed in the channel (that the sales reps from their distributors of choice be technically competent to assist in the sales of their products) but I tried to make the point that it was hampering their ability to make inroads into the consumer space.

I wasn't advocating that they drop their current distributors. Guys who build datacenters are not buying components from Supercom, generally speaking. For that, Seagate is well placed in the channel with their current distribution partners (and those datacenter guys wouldn't ever solicit, or be inclied to receive, brand advice from distributor sales reps). But IDE and SATA sales dwarf U320 SCSI and SAS drives and Seagate isn't well placed to sell those lower end, higher volume, drives.

The other thing I asked the guy was if Seagate was at all concerned about how hard it was to find good quality SCSI cables. He wasn't. He said SAS was a partial answer to that problem but generally, the majority of their sales was for drives that connect without the need of a cable, inside a RAID enclosure of some sort. Connectivity to those RAID enclosures was someone else's problem.

[schmosef]

Maxtor ------\
              |--- Maxtor------\
Quantum -----/                  \
                                 |--- Seagate
Seagate -----\                  /
              |--- Seagate----/
Conner ------/

Who's next on the list

I can only think of Western Digital.

I could be confusing a different brand but I don't think that Lacie actually makes their own drives. I think they integrate parts made by others.

[Victorian]

That's my point. They sell largely OEM products through largely retail box focused distributors.

I told him it wasn't a good pairing for the consumer space.

Now for them, they've already got a certain position of market dominance so I guess it's not so important that they be well placed in the channel (that the sales reps from their distributors of choice be technically competent to assist in the sales of their products) but I tried to make the point that it was hampering their ability to make inroads into the consumer space.

Things must be different back east. I seldom buy at a 'big box' store as I find them too expensive. About 90 % of what I buy (or suggest to others) is from the little independent computer stores in the city (we seem to have millions of 'em in the city). Usually they ONLY have OEM drives for sale. The 'big box' stores in town only sell retail boxed drives.

[schmosef]

I think you're confusing the retail sector with commercial/business sector VARs and System Integrators.

Guys like me don't carry inventory because we don't deal with the public. I don't have a store; I have an office. Customers don't come to me; I go to them.