updated 07:35 am EDT, Tue April 19, 2011
Samsung and Seagate strike hard drive union
Samsung and Seagate on Tuesday lived up to last-minute rumors by forging a deal for their storage businesses. Under the terms, Samsung will fold its hard drive business into Seagate's while Seagate will in turn give Samsung drives for computers and other devices. Samsung will bring its flash memory into play and feed not just Seagate's enterprise solid-state drives but also hybrid drives and "other products."
Corporate aspects of the deal will see the two work more closely together on enterprise storage as a whole as well as widen their patent cross-licensing deals. Samsung receives some of the best of the deal as it gets both $1.38 billion from Seagate in cash and stock as well as a substantial equity stake in the American company.
The two plan for the deal to wrap up by the end of 2011.
Both companies had major incentives to complete the deal. Seagate saw the deal as giving it access to a southeast Asian market that was previously hard to reach. Getting Samsung flash will also give it a fast track to making home-ready solid-state drives that it has previously considered impractical.
Samsung's hard drive business has routinely been struggling and has been considered an increasing liability at the company. The rises of smartphones and tablets have been largely to blame as the emphasis been placed more on flash memory. Apple has been singled out both as Samsung's largest customer for flash but also for its industry impact. The iPad has been dragging down netbook makers and forcing them to move to tablets themselves. Apple has lately been pushing its first solid-state-only computers as well through the MacBook Air and enjoying an unusual level of success for the normally niche market.