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IBM Bails Out of the Hard Drive Market

DJ STORM writes: "IBM has decided to exit the hard drive market citing the market has become too competitive.They plan to sell 70% of the their HD business to Hitachi. The new company name is unknown. One has to wonder if this has anything to do with IBM's troubled Deskstar GXP series." IBM will still have part ownership of the resulting venture, but it sounds like no more Deskstars. Update: 04/17 16:33 GMT by T : You may also find interesting some older posts about IBM's work on increasing hard drive storage (1, 2, 3); hopefully, the new company will continue that R&D effort.

17 of 344 comments (clear)

  1. "Leaving" the market by Darth_brooks · · Score: 5, Insightful

    will this be anything like the numerous times IBM has decided to get out of the desktop PC market?

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  2. deskstar? I doubt it by parc · · Score: 5, Insightful

    I very seriously doubt the deskstar caused IBM to give up. It was one version of a single product in a long line of products they produced.

    Think about it. Prices are $1.4/GB, and people still complain about the price. At what point do you say "we're making...$.50 per drive we sell. Let's give up." ?

    1. Re:deskstar? I doubt it by perky · · Score: 5, Funny

      At what point do you say "we're making...$.50 per drive we sell. Let's give up." ?

      The point at which you are making 50 cents per drive? ;-)

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  3. They were the real competitors by Brento · · Score: 5, Insightful

    IBM has decided to exit the hard drive market citing the market has become too competitive.

    Too competitive? They were the ones introducing all the cool features. They were the first ones out with quiet IDE drives, the first ones with adjustable noise levels, the first with the "pixie dust" stuff with awesome platter density, the first big (60+ gig) laptop drives. I can't think of another hard drive company that was nearly as competitive as IBM was, and for them to say the market is too competitive, that really tells you something.

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    1. Re:They were the real competitors by swillden · · Score: 5, Insightful

      Yeah I thought that they were the trend setters. How many times have I read "IBM breaks its own record by creating bigger/better/faster/smaller" hard-drive.

      I suspect that their research in drive technology will continue, but that they'll make money by licensing the technology rather than building drives. It's actually a common IBM strategy; IIRC IBM receives over $1B per year in revenues from licenses of its research patents.

      In true /. style I didn't bother to read the original article, but I also suspect they'll hang onto their laptop drive business, because it's a relatively high-margin business and because that's the area where their researchers have most thoroughly trounced the competition.

      Note that while I am an IBM employee I have no direct knowledge of IBM's hard drive division (don't even know any of the engineers to collect scuttlebutt from). My relationship with IBM's hard drives is as a customer.

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  4. Not quite out... by zodar · · Score: 5, Funny

    Actually, IBM is going to stay in the hard drive market, but only for 330 hours per month.

  5. manufacture vs. research by buzban · · Score: 5, Interesting
    what i don't think this article talks much about is whether or not IBM will continue to conduct the voluminous research it has traditionally done relative to data storage. IBM has patents on tons (a technical term) of HDD and related technologies; the company has a hand in many such products, even when their name isn't on the label.

    personally, i hope they keep their labs working on the research end of data storage, because i'm not sure that there's anyone else to pick up the slack. if there isn't, the pace of "bigger capacity, faster, smaller footprint, more, more, more ..." just might slow down a little.

  6. Kudos to Big Blue by nesneros · · Score: 5, Insightful

    For following the "real" rules of capitalism, and bowing out when they can't compete. I've seen too many companies lately either using legislation (telcos, entertainment) or shady business practices (MS) to avoid competition, instead of re-structuring their business or leaving the market. All this does, in the long run, is stifle the economy and give capitalism a bad name.

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    1. Re:Kudos to Big Blue by Zathrus · · Score: 5, Insightful

      It's a lot easier to bow out of a market when it's a small portion of your total revenue or profit.

      The IBM Storage Systems division is/was a part of the Hardware divsion. That division also includes PC, notebook, mainframe, and various other hardware sales. It, as a whole, accounted for ~39% of the total revenue and ~29% of the total profit of IBM for last year (as per their latest 10K).

      Now those aren't numbers to sneeze at, but consider that the HD division is a segment of the entire Hardware division. And while the numbers aren't split out, if you read the 10K you'll see they blame a lot of the decline in revenue for the Hardware group on pressures in the PC and HDD market.

      Given all of that, IBM can look at the long term market and spin off a portion of itself to an independant company which it retains a large share of. Realize some immediate cash gains, and you reduce the risk you are exposing the company to. If that 3rd party company folds, then you have a tax write off on an investment, and it doesn't look nearly as bad on the balance sheet.

      But the important thing here is that IBM has this option. The storage device market is not their lifeblood. If you released a holographic storage system tomorrow that blew the entire HDD market out of the water, IBM would be hurt, but not fatally impaired.

      The same is not true for most of the companies you mentioned. They're looking at potential extinction (particularly the middle men in the entertainment business - e.g. the studios and record labels). So they're fighting for their lives. They can't just "leave the market" or "restructure their business". There is no new market and no new structure for them to go to and retain anything even vaguely like what they have now.

      I deeply disagree with their attempts to have government prop their industries up, but I'm also realistic. Cornered animals don't fight nice.

  7. Holographic drives by commonchaos · · Score: 5, Interesting

    I really hope that this means they will be coming out with a holographic drive soon, I went to a science fair back in '99 (if memory serves) at the IBM Almaden Research Center. They demonstrated a table sized holographic drive to us - they played a IBM commercial off of it... I've been waiting ever since.

  8. The Register has also an article... by u01000101 · · Score: 5, Informative

    ... about this, at http://www.theregister.co.uk/content/53/24896.html which also details the preliminary agreement between IBM and Hitachi.

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  9. Corrections ... by ProfMoriarty · · Score: 5, Informative
    They plan to sell 70% of the their HD business to Hitachi.

    Uhmmm .. this isn't exactly correct. From the article ...

    Separately, IBM and Hitachi also said they plan to combine their various hard-disk drive operations into a new, stand-alone joint venture. Hitachi would own 70 percent of the joint venture and pay IBM for its hard drive assets, subject to the completion of negotiations, the companies said.

    It would appear that the headline is more correct than the story, IBM is out, but own a 30% stake in the new company ... this is not the same as selling 70% to Hitachi ...

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  10. Merger, not sale! by rkgmd · · Score: 5, Informative

    IBM and Hitachi are *merging* their disk business so that IBM gets a 30% stake (and Hitachi, 70%). The story's comment "They plan to sell 70% of the their HD business to Hitachi." seems incorrect to me; IBM is simply estimating that its current disk business is worth 30% of the joint disk business. Also, note that Hitachi has a very strong storage systems business HDS (right behind EMC) that is very profitable (also resold by SUN as Storedge9900 series datacenter/enterprise storage products, I believe), so big blue may have merged their disk business with a view to ensuring future profitability in the overall storage space.

  11. Bad Power Supply by crow · · Score: 5, Insightful

    The situation you described sounds like a bad power supply. As others have mentioned, it's the controller, not the hard drive, that requests IRQs--that's something that is usually part of the motherboard chip set. So if the failure you described is accurate, you're seeing failures in multiple parts of the system, which is a strong indicator of a bad power supply. That could also explain why you had more than one drive fail in the system, though often with drives you do find reliability comes and goes in bunches.

  12. Re:Good Riddance... by CaptainPhong · · Score: 5, Insightful

    I don't really think it's fair to condem them for one bad line of drives... For those of you with short memories, prior to the Desktar GXP, IBM drives were frequently (most often actually) the first choice for quality. Somehow this fiasco gave all their drives a bad name. They certainly weren't the first manufacturer to have serious problems with a particular line or model of drive (in fact, probalby all of them have been hit at one point or another.)

    Years ago my 1.6 Gig Western Digital Caviar drive started to suddenly sprout bad sectors. I gave WD a call and was given an abusive and insulting runaround by the tech I got. I got so mad that I had to smash a few things to calm down before calling back to try to get someone else. The next guy was actually really nice and gave me an RMA# immediately once he realized I knew what I was talking about. After having the replacement several months, I booted up one day and the HD suddenly made the sort of noises you'd expect from a modem. That's when I discovered that the 3 platter 1.6 gig Caviars had been quietly recalled because they were extreemly prone to a variety of failures. I was rather mad, not so much because of the defect (stuff happens), but that the recall was apparently delayed and not well publicized.

    IBM could have handled the situation better for sure - a well publicized recall is in the best interest of the customer. However, more often than not, keeping the problem as quiet as possible is in the best interest of the company. IBM apparently tried to keep this one quiet (or was simply blind to the problem for a long time), but they got blasted instead. Sadly, I don't think the loss of this competitor in the HD market is a good thing.

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  13. Maybe they could call the company by cca93014 · · Score: 5, Funny

    IBM|Hitaclick click click grrrrrrrrrrApr 17 11:15:12 ben kernel: hdb: dma_intr: status=0x51 { DriveReady SeekComplete Error }
    Apr 17 11:15:12 ben kernel: hdb: dma_intr: error=0x40 { UncorrectableError }, LBAsect=11288143, sector=11288080

  14. Re:So who makes "good" hard drives? by slaker · · Score: 5, Informative

    The consensus on storagereview.com is that the best all-round drives at the moment are being made by Maxtor and Western Digital. Maxtor, in particular, hasn't had a troublesome drive model in quite some time, and has an excellent service orientation, including a no-hassle RMA service.

    Reliability is found in the mid-range 10,000rpm SCSI drives like the Atlas III and in the low-end 5400rpm models, particularly those from Samsung and to a lesser extent Seagate and Maxtor. SCSI drives *do* have longer warranties, if that says anything. In 7200rpm, probably Maxtor or Seagate's offerings.

    Quiet: IDE, the choice is just about any 5400rpm drive, or Seagate's Barracuda IV for 7200rpm. Fujitsu's MAN-series SCSI disks are as close as you'll get to quiet, there.

    Fast: IDE, 5400rpm: Western Digital's WD800AB. 7200rpm: Either Maxtor's 740X (8.5ms seek) or the Western Digital WD1200JB (transfer rates through the roof).
    SCSI: Maxtor's Atlas III for 10,000rpm or Seagate's X15-36LP among the 15krpm units.

    Is that what you want to know?

    Find out more at www.storageforum.net or www.storagereview.com. We're really very helpful people. :)

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