Sensing the opportunity for growth,
Western Digital Corp.
) has made a strategic investment in Skyera Inc. The capital arm
of Western Digital, namely Western Digital Capital has
co-invested $51 million to extend its strategic relationship
with Skyera. The companies have come together for joint
We believe that the basic motive behind this strategic
investment is to enhance storage technologies, which will enable
end-users to develop better storage solutions that are needed to
improve the company's database management skills.
Skyera's most updated version of the 19/20nm solid-state
technology, which can replace the traditional enterprise hard
disk systems, appears most attractive for WDC. Moreover, Skyera
offers this product at a competitive price of $3 per
In Feb 2013, the technology research firm "TechNavio"
re-evaluated their growth expectation for the storage market. The
firm expects the Global Storage Resource Management market to
grow at a CAGR of 6.32% through 2012-2016.
The key factor fueling the growth of this industry includes
noticeable growth in enterprise data volume. The Global Storage
Resource Management market has taken the help of cloud storage
solutions as well. On the other hand, efficient cost management
remains a challenge for this industry.
Again, competition between companies like
) is expected to put some pressure on pricing of the products.
Each company is coming up with new marketing strategies to
capitalize on this line of business.
Furthermore, the softness in PC demand has affected the data
storage industry. Although the company has been able to handle
competition efficiently, bigger players like Fujitsu Ltd.,
Samsung and Toshiba pose challenges.
To combat this ever growing competition, companies like
Western Digital have adopted a diversification strategy. WDC has
rolled out a host of hardware and software solutions, which are
particularly designed to make storage easier and more readily
Additionally, we believe that the acquisition of Viviti
Technologies (formerly Hitachi GST) has strengthened WDC's
foothold in the data storage business. We believe that it will
take a few more quarters for the company to witness noticeable
Currently, Western Digital has a Zacks Rank #3 (Hold).
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