Western Digital is generating more revenue from flash and SSDs than from disk drives. Does this show that WD is losing out big time to Seagate in the key enterprise nearline HDD market? Or is it a forever thing?
It appears to be the latter, judging from CEO David Goekeler’s comments on the Q4 earnings call yesterday. “We believe flash is the greatest long-term growth opportunity for Western Digital and is an area where we’ve already had a tremendous foundation with consumer cards, USB drives and client and enterprise SSDs.”
Our sister publication The Register has covered WD’s Q4 and full fiscal 2020 year results and we’ve dived into the numbers to see how disks and SSDs fared relative to each other.
WD shipped 23.1 million disk drives in the quarter, down 16.6 per cent from 27.7 million shipped a year ago. HDD revenue was $2.05bn, down 3.7 per cent on the year ago’s $2.13bn. Reflecting capacity price trends, total HDD exabytes shipped – about 110 EB – was 12 per cent on the year, according to Wells Fargo senior analyst Aaron Rakers.
He told subscribers: “WD’s Nearline HDD capacity shipments grew ~30 per cent y/y, or leaving us to estimate flat q/q. We estimate nearline HDD capacity shipped at ~76 EBs, which compares to Seagate shipping 79.5 EB (+128 per cent y/y), and Toshiba shipping 8.4 EB (-14 per cent y/y) in the June quarter. We estimate WD’s non-nearline HDD capacity shipped at ~33 EBs, or -15 per cent y/y and -5 per cent q/q.“
So it looks like WD was not a beneficiary of Toshiba’s calamitous quarter i hard drives, which saw the company take a big hit from an outage at its Philippines disk drive plant.
WD says 14TB sales are doing well, but the HDD business has not been helped by Seagate’s dominance of the 16TB nearline disk business. WD was late to market with 16TB and 18TB drives and aims to remedy this by ramping 18TB drive production to one million drives in the next quarter.
WD expects cloud nearline disk drive buyers to slow purchases this quarter: “We feel like we’re definitely going into a digestion phase,” Goekeler said. “If we look at — we’re coming off of three really strong quarters of exabyte shipment and the demand signals we’re getting are going to be – are a little bit down for the next quarter or two.”
Let’s now take a quick peek at WD’s flash / SSD business, where revenue of $2.24bn was 48.6 per cent higher than the year ago quarter ($1.51bn).
Goekeler noted “healthy demand for our flash-based notebook solutions drove record revenue in our OEM end market,” in the earnings call, and added: “Enterprise SSD revenue in the quarter grew nearly 70 per cent sequentially and our revenue share increased to the low double digits. This will remain an important area of focus within our flash portfolio.”
To conclude, the disk drive business is now secondary to flash, and NAND wafers drive more revenue for WD than disk drive platters.