The storage sector is not doing well: sales of hard drives and SSDs have fallen sharply in 2022. Big names such as Western Digital and Seagate are bracing for difficult months.
Western Digital CEO David Goeckeler said the company will fall short of its revenue target of $3.8 billion, and Seagate also lowered its revenue forecast from $2.5 billion to $2.1 billion. Seagate speaks of a ‘multiquarter’ correction, which is not exactly a sign of optimism for the coming 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 at more than fifteen percent.
“Everyone has just pressed the pause button,” CEO David Mosley told a conference recently. That pause is also being felt for investments in cloud storage, his WD competitor added.
A cocktail of adverse macroeconomic conditions is believed to have caused the storage dip. Starting with the corona pandemic. That completely turned the supply chain of the storage manufacturers upside down. This pushed up the costs of producing hardware, which in turn passed on to the prices of the products.
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. Now that employees are returning to the office more often, the need to invest in solutions themselves is diminishing.
The future doesn’t bode well, unfortunately WD and Seagate seem to agree unanimously for them. Investments in cloud storage will probably recover faster than the sale of physical storage.
If the crisis lasts for a long time, manufacturers will have to take drastic measures. For example, under pressure from investors, Western Digital would consider divesting the production of hard drives in a spin-off.