Cloud is a Key Growth Market for Seagate in India

BS Teh, Senior VP Global Sales and Sales Ops, Seagate

While the PC market might have declined, there are lots of new opportunities cropping up, both for hard drives and solid state drives in India. We had a face to face interview with Seagate’s global sales head, BS Teh to understand the company’s plans for the Indian market, key target industries, and future plans around SSDs and HDDs. Here’s the full interview.

Q> What is your plan and roadmap for the enterprise IT market in India?

BS Teh>The market has historically been dominated by big branding OEMs like Dell, HP, Lenovo. We work with them to ensure that our product is there.

The second market, though not as big, is the local integrated solution providers. There aren’t a lot of local companies playing in this space anymore.

Our third focus area is cloud, and I believe India has a huge market for it, once of course all the bandwidth and other issues are addressed. It would be a large market and that’s really all about education and partnership with the local service providers like Reliance. Our focus on the cloud space starts and ends with products. We have to ensure that we provide the right products that our cloud customers need. We do this by getting into an engineering type of engagement with cloud service providers and work with them to optimize our drives’ performance to their workload characteristics. For this, we focus on power consumption, size, and weight of our drives, as well as optimization of our firmware.

Q> Which other growth verticals are you targeting in India?

BS Teh> We’re also very bullish about growth in the consumer market. Though PC penetration rates in India are still very low, the sale of smartphones has gone through the roof, which puts more content generating devices into the market. This generates more data and translates into more opportunities for us by having sufficient external drives, NAS boxes, internal drives, etc.

The Creative Professionals or Bollywood is another hot focus area for us.

Q> What about other use cases like surveillance, NAS drives? Are you seeing increased adoption as an industry trend?

BS Teh> Absolutely. For 2016, the total number of units shipped for surveillance industry is probably 15%. The average capacity being shipped to this segment is more than double of what’s being shipped for other industries. Right now, half of the drives being shipped to the surveillance market are of 4 TB capacity, whereas industry average is only 1.7 TB. So, it’s not a large market from a volumes perspective, but it’s growing by more than 30% a year.

Q> Your plans for channel partners and improving customer support in India, considering that there’s tough competition from WD in both areas?

BS Teh> We are absolutely going to do more. In last couple of years, we might have taken our eye off the ball, primarily because the market was declining (as it was largely PC dominated). But now, we’re seeing a turnaround with emergence of other markets like surveillance, NAS, etc. that are offsetting this decline. We realize that we’ve been underinvesting in channel programs, coverage, and reach, but with turnaround happening, you’ll now start to see us do more to really get the excitement and mind share of channel partners in our market. This will also include a review of our after sales services.

So, we’ve got a pretty solid momentum in the consumer space, where our presence and our business continues to increase.

Q> Any plans for entering mobile, flash based storage?

BS Teh> We do have a flash strategy, which is all about building SSDs for the enterprise market. We’re not getting into the consumer market at this point of time. We’re coming up with different solutions though, like our recent partnership announcement at CES with DJI, where we’re helping them take the data they’ve collected and stream it directly on the drive itself.

Q> Your future plans for HDD and SSD markets?

BS Teh> HDD revenue is still about 50% more than SSD revenue in the overall market, but SSD revenue is growing faster. We want to lead in the HDD space, as there are only three players playing in this 20-billion-dollar business.

Q> If you’re continuing to focus on HDDs, then why did you shut down your manufacturing facility in China recently?

BS Teh> The profile has changed in the industry. We’re no longer shipping volumes as before. We’re shipping lesser units, but of higher capacity. A factory would focus more on the number of units produced, at an operational level, but from our perspective, since the number has come down, we don’t need as many factories. Despite that, our revenue is sustained and even growing, simply because we’re shipping higher capacity and higher average unit price drives.

Five years ago, the total market size per quarter for HDDs was as high as 170-180 million units. Now, it has come down to 100-110, so we have to reduce our factory foot print. It’s a part of evolution or shift in business.

Q> You recently experimented with 60 TB SSDs. Is this any indication that the cost of SSDs per GB will come down dramatically, and result in SSDs overtaking HDDs?

BS Teh> The 60 TB SSDs are being designed for a very specific application and market, and don’t really indicate that they will overtake HDDs. That’s because it’s beyond a cost issue. It’s also a capacity issue. Can the semiconductor industry have enough fabs in place to fulfill that need? I don’t think so. Even if the price comes on parity, there’s no capacity to support it.

What will happen in the industry by 2020 though is that you’ll start to see the cut over in revenue from SSDs to be as big as the revenue from HDDs. In terms of number of units, the cut over will happen a little bit after that, past 2020. In terms of Exabyte shipments, I think it’s so far out, because even by 2020, the capacity that SSDs store would only be as high as 20%, so Exabyte shipments still have a long way to go.

The author was hosted in Singapore by Seagate