January 21, 2010, 7:44 pm Seagate Goes Direct By ASHLEE VANCE NY Times
http://bits.blogs.nytimes.com/2010/01/21/seagate-goes-direct/?ref=technology Some companies — most notably Dell — choose to go direct, others have directness thrust upon them. Seagate, the world’s largest maker of hard drives, has started selling products directly to large customers in higher volumes than ever before because more companies with big data centers are trying to cut costs. “We are seeing more and more of the direct purchases from companies with huge data sets,” said Stephen Luczo, the chief executive of Seagate, in a recent interview. Google is famous for mastering this method. Part of its mystique has come from the secretive ways it buys chips, motherboards, memory and drives directly from the major suppliers and constructs its own servers for its immense data centers. Google has essentially cut out the middleman — in this case, the likes of Hewlett-Packard, Dell and I.B.M. — to gain a competitive edge. Not surprisingly, other large service providers have followed this model. And now, retailers, financial services companies and other major computer purchasers are doing so as well, Mr. Luczo said. “The guys like Amazon, eBay and Yahoo — all those guys have bought direct,” Mr. Luczo said. “And it’s bleeding now into investment banks and other verticals.” As a result, Seagate has stumbled upon a more diverse customer base. The increase in direct purchases underscores a couple of shifts in the hardware industry. For one, the hardware behemoths like H.P. and Dell end up competing with their traditional suppliers like Intel and Seagate for big volume business. Second, we’re seeing what happens as large companies struggle to satisfy their insatiable demand for computing horsepower. More companies appear willing to get down and dirty by meddling with their own systems rather than buying prepackaged goods from the large computer makers. Over all, Seagate has benefited from rising demand for its hard drives. On Wednesday, the company reported a 33 percent rise in second-quarter revenue, to $3.03 billion, from $2.27 billion in the same period last year. Seagate posted a profit of $533 million, countering a loss of $2.82 billion from last year’s second quarter. Shares of Seagate rose almost 10 percent during Thursday’s trading, to $19.49. Over the past few months, Seagate has continued to update a number of consumer-oriented products, including the FreeAgent Theater media player. People can insert a FreeAgent Go hard drive into this product and play movies or look at photos on their TVs. The FreeAgent Theater can also pull content from sites like YouTube and Flickr, and Seagate intends to announce more content partners in the near future. Mr. Luczo conceded that Seagate was not likely to become the next big name in consumer electronics. “Is Seagate in a position to compete with the big consumer electronics guys in the home? Of, course not,” he said. “We don’t have $500 million to spend on marketing, and the service providers have the content.” Still, Mr. Luczo thinks products like the FreeAgent Theater point to the important role storage plays with these types of devices and expects Seagate to work with the consumer electronics companies for this piece of their products. -- ================================ George Antunes, Political Science Dept University of Houston; Houston, TX 77204 Voice: 713-743-3923 Fax: 713-743-3927 Mail: antunes at uh dot edu *********************************** * POST TO [email protected] * *********************************** Medianews mailing list [email protected] http://lists.etskywarn.net/mailman/listinfo/medianews
