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Why Toshiba is buying Fujitsu's HDD business

Lucas Mearian | Feb. 18, 2009
With this deal, Toshiba would position itself to become a leading contender in the enterprise-class solid-state disk (SSD) drive market

Scott Maccabe, general manager of the Americas for Toshiba's storage business, said, "We have been investigating entering the enterprise space for some time. We did our due diligence of what it would take to expand our market share. The logic made it more reasonable for us to acquire that rather than develop it in-house." "It really lines up from a strategic as well as tactical perspective for us," Maccabe said.

A solid win on SSD

One market that has escaped Toshiba is in enterprise-class SSD drives, the fastest growing segment of the flash drive marketplace. Toshiba invented NAND flash memory, but for all of its innovation in the space, the company has only two SSD products based on NAND -- one for laptops, the other an enterprise-class drive.

Stec Inc. and Intel Corp. are the current leaders in the enterprise-class SSD space.

Maccabe said the Fujitsu acquisition would open an instant door into the enterprise-class SSD market because of the depth of Fujitsu's existing enterprise-class business customers. Wong agreed.

"I think for Toshiba, they need to make sure their solid-state disk unit and hard-disk drive unit work together. Currently, Toshiba's SSDs are basically being manufactured and sold by their NAND flash business unit. So, internally, I wouldn't be surprised if there isn't some friction there," Wong said. "Samsung has the same problem."

Maccabe, however, said Toshiba's HDD unit will focus on enterprise SSD sales because they have more experience in that sales space. Toshiba aims to build on the consolidation between the two companies to raise its share in the overall HDD market to over 20% by 2015, it said.

Even with the many synergies between the two companies, Maccabe said he didn't expect layoffs to result from the buyout. Fujitsu and Toshiba both sell into the mobile market place, but Maccabe said overlap was minimal.

Toshiba has a 1.8-inch hard drive line and Fujitsu does not. Fujitsu has an enterprise-class HDD product line; Toshiba doesn't. And, while both companies have 2.5-inch HDD lines, Maccabe said Fujitsu would "leverage any overlap into efficiency and scale and then have a broader set of products," Maccabe said. "We're committed to bringing everybody over," he said.


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