Western Digital Purchases Hitachi’s Storage Unit

In news that came as a big shock to a lot of people, Western Digital yesterday announced that it would be acquiring Hitachi Global Storage Technologies, and at the same time, gaining ownership to Hitachi’s entire line of mechanical hard drives for both the desktop, OEM and enterprise market. Why the purchase? Your guess is as good as ours!

Being that it “seems” like the mechanical hard drive market is beginning to shrink, due to the introduction of SSDs, it’s been speculated that Western Digital was interested in owning one of its bigger competitors in order to increase its own marketshare, and in turn make a nice profit in the end. But for its $4 billion that’s been invested into this deal, that doesn’t sound like an easy feat.

Another theory is that WD wants to reach certain markets where it doesn’t have a great foothold, such as those that use SCSI and SAS. This sounds a bit more likely, since while regular desktop drives don’t carry very large of a profit margin, enterprise drives do. But still, four billion? That seems like quite a large sum to take a chance on like this.

It could also be that Hitachi owns the rights to certain patents that WD would love to have. Those include patents that Hitachi itself would have inherited from its own purchase of IBM back in 2003. Whatever the reason, we’re likely to see the fruits of WD’s labor soon enough. Until then, speculate away.

IRVINE, Calif. and SAN JOSE, Calif. – Mar. 7, 2011 – Western Digital (NYSE: WDC) and Hitachi, Ltd. (NYSE: HIT / TSE:6501) announced today that they have entered into a definitive agreement whereby WD will acquire Hitachi Global Storage Technologies (Hitachi GST), a wholly-owned subsidiary of Hitachi, Ltd., in a cash and stock transaction valued at approximately $4.3 billion. The proposed combination will result in a customer-focused storage company, with significant operating scale, strong global talent and the industry’s broadest product lineup backed by a rich technology portfolio.