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Western Digital entered the enterprise storage market just several years ago and introduced its first Serial Attached SCSI (SAS) just about a year ago. However, analysts from Wedbush Securities believe that WD could snap some enterprise market share from Seagate Technology, the company with a long history of being a leading supplier of high-end drives.

“We believe that Seagate could lose some market share to Western Digital in the enterprise segment, as Western Digital further extends its enterprise class hard-disk-drive product line. In addition, we also believe that there could be more pricing pressure as more capacity comes online in calendar third-quarter 2010,” analysts Kaushik Roy and Hemant Hebbar from Wedbush Securities wrote in a note to clients.

The financial analysts estimate that the total available market (TAM) for the Q1 2010 was 157 million units, which is in the middle of Seagate's expected range of 155 million – 160 million units. The analysts believe that the supply-demand situation in Q1 was in balance, whereas in Q4 2009 the demand actually exceeded supply.

Unfortunately for the manufacturers of hard disk drives (HDDs) more production capacity will be available this summer and fall, as a result, pricing pressure will amplify and profit margins of hard drive makers will go down.

“We expect an increase of at least 15% in glass availability in the summer time frame. Everybody is aware that additional disk-production capacity is coming online in the July-August time frame. Original-equipment manufacturer vendors such as Dell and HP are unhappy that HDD vendors are enjoying fat margins while they themselves are struggling to improve margins and are waiting to hammer the hard-disk-drive vendors on pricing as soon as more capacity comes online,” the analysts said.

Tags: WD, Western Digital, Seagate

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