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Seagate Technology | SKYY

Company Overview

Seagate Technology is a US data storage company and currently the second largest Hard Disk Drive (HDD) maker in the world. Seagate offers storage solutions for both consumers and corporations.

From the largest data centre used by global enterprise, to the personal user, Seagate’s mission is to ensure every customer can access, store and transfer data quickly and reliably.

The company leads the industry in driving data storage technology toward a lower cost per terabyte, through hard drive optimisation and greater capacity. Whether for personal use, creative and design computing, online gaming, or large-scale surveillance systems and hyperscale environments, Seagate drives are opening up new data management opportunities across a wide range of markets [1].

Whether it be a large data centre used by global organisations or a personal user, Seagate’s mission is to ensure every customer can access, store and transfer data quickly and reliably.

Cloud Computing and Competition

Seagate is seen as a leading indicator of Cloud spending and capital expenditure growth, and its clients include all of the largest Cloud infrastructure providers (IaaS), including Amazon, Google, Apple and Facebook.

Unlike Seagate’s biggest rival Western Digital who aggressively expanded its flash drives and memory business by acquiring SanDisk in 2016, Seagate focused on selling high-capacity HDDs to data centre customers to meet the rising demands of cloud-based services. Many of these customers tend to prefer HDDs to SSDs (solid state drive) because they offer much more storage per dollar [2].

To counter competition from SSDs in consumer products, Seagate has moved away from smaller HDDs (capacities of 1TB or less), and instead is focused on selling high-capacity drives for desktops, workstations, and data centres [3].

During the 2nd quarter of 2019, Seagate generated 39% of its sales from the enterprise market, 32% from the non-PC consumer electronics market, and 20% from PCs [4].

As the need for both hard disk and cloud storage dramatically increase, Seagate will benefit significantly. The growing demand for various gear used for cloud computing will help drive revenues.

Latest Innovations 

The company’s latest 14-terabyte hard-drives will likely also spur demand due to their large storage capacity. Seagate benefits from accelerating data storage growth as enterprises adopt new data technologies. These new hard-drives enhance Seagate’s enterprise and specialty drive portfolio, and consist of IronWolf® and IronWolf® Pro for network attached storage (NAS) applications, the BarraCuda® Pro desktop drive, surveillance-optimised SkyHawk™, and Exos™ X14 for hyperscale data centers. Seagate’s portfolio of products enables customers to consume, manage and utilise digital data more effectively and efficiently, helping to establish new benchmarks in speed and capacity [5].

Acquisitions 

Seagate has focused on smaller acquisitions that cost less than $1 billion over the past five years, including storage systems company Xyratex and Dot Hill Systems – a software and hardware storage systems supplier [6].

Summary

Seagate should be able to keep selling bigger HDDs at lower prices than SSDs to enterprise customers, which should keep revenue stable while enabling steady returns for shareholders. It is safe to say that over the next five years, Seagate will keep shipping traditional HDDs with higher capacities for cloud customers while repurchasing its shares and raising its dividend.

Find out more about the HAN-GINS Cloud Technology UCITS ETF (SKYY)

As of 12th August 2019, the HAN-GINS Cloud Technology UCITS ETF (SKYY) held 2.25% of it's weight in Seagate Technology. 

Read our SKYY Whitepaper "Ahead in the Clouds" here

Article Date: 13th August 2019.

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