The storage sector is not doing well: hard drive and SSD sales fell sharply in 2022. Big names like Western Digital and Seagate are preparing for tough months.
Western Digital CEO David Goeckeler said the company will not meet its $ 3.8 billion revenue target, and Seagate also lowered its revenue forecast from $ 2.5 billion to $ 2.1 billion. Seagate talks about a ‘multi-quarter’ correction, which isn’t exactly a sign of optimism for the next few quarters.
The storage giants speak of an unusual situation in the storage market where the demand for storage hardware such as hard drives and SSDs is low in both the professional and private markets. In August, Storage Newsletter estimated the decline to more than fifteen percent.
“Everyone just hit the pause button,” said CEO David Mosley recently at a conference. That pause is also being felt for investments in cloud storage, its competitor WD added.
Unhappy cocktail
A cocktail of adverse macroeconomic conditions is believed to have caused the drop in storage. Starting with the corona pandemic. This has completely turned the storage manufacturers supply chain upside down. This increased hardware manufacturing costs, which in turn passed on to product prices.
The return to the office is also not good for the sale of hard drives and SSDs. During the pandemic, workers showed a greater interest in physical hardware to keep data safe at home. As employees return to the office more often, the need to invest in the solutions themselves diminishes.
Pessimistic outlook
The future does not bode well, unfortunately WD and Seagate seem to agree unanimously for them. Investments in cloud storage are likely to recover faster than selling physical storage.
If the crisis lasts for a long time, producers will have to take drastic measures. For example, under pressure from investors, Western Digital would consider limiting the production of hard drives reject in a spin-off.
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