Seagate and Western Digital: Navigating the HDD Market with Diverging Strategies
Seagate (NASDAQ: STX), Western Digital (NASDAQ: WDC), and Japan’s Toshiba are currently the only remaining players in the hard disk drive (HDD) market. Historically, over 218 companies have entered the HDD sector since its inception in 1956, but many have exited the market due to bankruptcy, mergers, or acquisitions. The industry has consolidated significantly over the years, leaving these three as the dominant suppliers catering to data centers, enterprise storage, and consumer markets.
WDC’s CEO David Goeckeler highlighted Western Digital’s strong performance in Q2 2025, reporting $4.3 billion in revenue, a non-GAAP gross margin of 35.9%, and earnings per share of $1.77. He emphasized robust growth in the HDD segment, which reached a 12-quarter revenue high driven by strong adoption of UltraSMR technology, while the Flash business faced continued pricing pressure. Western Digital’s strategic shift toward higher-capacity nearline drives and cost-optimized storage solutions has been instrumental in its revenue recovery.
Goeckeler also announced that the separation of the Flash and HDD businesses remains on track for completion in fiscal Q3 2025. Western Digital and SanDisk shares are expected to begin trading as independent entities shortly after their respective Investor Days in February. This move is expected to enhance operational focus and unlock shareholder value, as the market attributes different growth potential to HDDs versus NAND Flash.
Seagate closed calendar 2024 on a strong trajectory, achieving consecutive quarterly growth in revenue, gross margin, and non-GAAP EPS throughout the year. CEO Dave Mosley highlighted the company’s structural improvements and strategic focus on value capture amid an improving demand environment, culminating in a decade-high gross margin performance in the December quarter. The company has aggressively positioned itself in the high-capacity storage segment, leveraging its HAMR (Heat-Assisted Magnetic Recording) technology to increase areal density.
Mosley emphasized Seagate’s progress in advancing its technology roadmap to address the growing demand for scalable, cost-efficient, and sustainable storage solutions, particularly in the AI era. The company began ramping HAMR-based Mozaic products to its lead cloud customer during the December quarter and is already sampling drives with capacities of up to 36 terabytes. Looking ahead, Mosley expressed confidence in Seagate’s position to drive profitable growth in fiscal 2025. He noted:
“Today, we have continued to ramp our 24-28 terabyte PMR platform, which has rapidly become our top product platform in terms of both revenue and exabyte shipments. At 30 terabytes or higher, our Mozaic HAMR technology delivers leading capacities and is gaining momentum across our customer base. There are now multiple customers qualified on this platform across each of the mass capacity end markets. Currently, we are ramping volume to our lead CSP customer while progressing on qualifications at additional cloud and hyperscale customers. These qualifications will set the foundation for the next phase of our Mozaic volume ramp starting in the second half of calendar 2025.”
This marks a pivotal transition in storage technology as Seagate moves toward broader HAMR adoption, potentially reshaping cost-per-gigabyte economics.
Business Strategy Implications
The key difference between the two companies lies in risk tolerance and market focus. Seagate is making a long-term technology play, focusing on the highest-capacity segment, which could pay off if HAMR adoption scales efficiently. Western Digital, on the other hand, is maximizing short-term profitability with UltraSMR while delaying a costly transition to next-generation technologies.
Western Digital's approach allows for faster adoption and margin improvement, making it attractive in the near term. Seagate's strategy, while more ambitious, carries higher execution risks and requires more time before delivering clear financial benefits.
Ultimately, both companies recognize the growing demand for high-capacity storage in AI and cloud computing, but their paths to meeting this demand differ based on their technology bets and cost structures.
HDD Metrics Overview
HDD Data Shipped
Chart 1 illustrates HDD unit shipments for Seagate, Western Digital, and Toshiba. Demand surged during the COVID-19 lockdowns due to increased data center usage, PC purchases, and the rise of videoconferencing and online shopping. However, demand weakened post-lockdowns due to inventory corrections in the enterprise cloud storage market. The supply-demand balance in the industry is normalizing, with data center operators resuming large-scale HDD procurements.
The trendlines in Chart 1 indicate a similar decline in revenues across all three companies over this period, according to The Information Network's report, “The Hard Disk Drive (HDD) and Solid State Drive (SSD) Industries: Market Analysis And Processing Trends”,
Chart 1
I estimate that the HDD industry’s total shipped capacity (exabytes) reached approximately 365.9 exabytes (EB) in 4Q24, marking a +70% YoY increase and +7% QoQ growth. The total industry capacity shipped in 2024 grew to 1,260 EBs, up 48% YoY, compared to approximately 1,185EBs (-12% YoY) in 2022 and 849EBs (-28% YoY) in 2023.
