Seagate and Western Digital, the two tech giants when it comes to disk storage, suffer from decreasing demand. For the third quarter, Seagate recently reported revenue of approximately $2.6 billion, gross margin of 20.2%, net loss of $21 million and diluted loss per share of $0.07. (see http://bit.ly/1VHWTeL for details.) Western Digital also had to report declining sales (see http://bit.ly/1W5C7Gk) for a row of more than four consecutive quarters on YoY base.
Source: NASDAQ 2016
Whenever more than one giant starts struggling in their core business, it is time to take a break and think about the influencing factors. Typically this is a sign that something is about to change. We saw shifting value generation from one to another good already many times in history. Here – we believe – we gain proof of such a development once more.
How to adapt?
Given we interpret the signs of change correctly, you definitely should consider to review you business and take a while to understand how the upcoming changes will impact your business. To cope with this we suggest the following five core questions:
- How will the change of technology impact my service delivery or product, respectively my value proposition to my customer?
- Might the changes – as for Seegate and Western Digital selling immense amounts of storage to the public – impact my customers demand? And if, what would be the worse case scenario?
- How might it impact the way my competition will deliver their products/services?
- What will these changes mean to my suppliers?
- Could I use the results from the changes to improve my value chain position?
This in mind, Seagate might have come to a conclusion that it would be a great idea to sell managed storage farms to the IaaS providers to secure their position and their market.
We do not want to put the gun on anybodies head. but we highly recommend to take a break and re-consider the own position taking into consideration the latest developments which really will change the world we are used to live in.