Last year Seagate Technology lost its unit market share lead to Western Digital, but retained its dollar market share thanks to its traditionally good positions on the market of enterprise-class hard drives. However, going forward the company's competitive advantages may decrease due to technology shifts and improved competition.

"We think Seagate could cede share in the enterprise segment owing to technology shifts and improved competition," said Mark Moskowitz, a hardware analyst with JP Morgan, reports Barron's web-site.

The enterprise storage industry is going changing. Many advanced storage systems now use Serial ATA, a consumer technology that no one could imagine in a data center just a decade ago. However, the market is shifting from Fibre Channel to Serial Attached SCSI and Serial ATA and on these markets there are more suppliers than Seagate and Hitachi.

"First, we expect that the technology shift from Fibre Channel to SAS and SATA disk drives could open the enterprise market to other participants. Historically, Seagate has been the consistent leader in providing Fibre Channel drives to the major OEMs," said Mr. Moskowitz.

Western Digital, the arch-rival of Seagate, is also expanding its lineups of offerings and will address the enterprise segment more significantly going forward. As a result, Seagate will have to compete against both Hitachi Global Storage Technologies, but against two rivals.

"Second, inputs from our primary research indicate that Western Digital and other participants are in qualification stages for supporting storage and server systems, which could mean the competition has improved," added the analyst.

Yet another factor that is against of Seagate and all the other hard drive makers is the increase of solid-state drive's (SSD) popularity. Many enterprises may adopt SSDs instead of traditional drives because of lower power consumption amid higher performance in terms of data throughput and the amount of input/output operations per second.

The JP Morgan analyst believes that the growth of hard disk drive (HDD) market will be just 6.5% this year, down from an earlier estimate of 9.6%.

Tags: Seagate, Hitachi, Western Digital, WD, Business