Why Did Seagate's HDD Revenue Drop 25% Despite A 1.5x Growth In Exabytes Shipped?

Seagate (NASDAQ: STX) has seen steady growth in the number of hard drive exabytes sold over the past 5 years, rising from 228 exabytes in 2015 to 347 exabytes in 2019, a growth of over 50%. (1 exabyte = 1 million terabytes)
Over the same period, Seagate’s hard disk drive revenue has dropped from $12.87 billion to $9.62 billion, a drop of around 25%.

You can view our interactive dashboard- Why Is Seagate’s HDD Revenue Under Pressure Despite A 1.5x Growth In Exabytes Shipped?– to find out more about what drove the inverse correlation between exabytes shipped and revenues.

Why did this happen?

  • Seagate has seen a drop in HDD units sold, dropping from 211.8 million in 2015 to only 128.3 million in 2019.
  • This is largely due to a drop in retail demand, with people preferring cloud storage and streaming services over physical memory devices.
  • Also, the average selling price per TB has dropped from $56.45 to $27.72, as memory devices sold now have 3-4 times the amount of storage space, as compared to devices back in 2015.
  • This has led to a drop in cost per bit, slashing the price per TB by more than half.

What does this mean?

  • Retail consumers are gradually moving toward streaming and cloud services, and this is bound to negatively affect Seagate’s hard drive revenue going forward as well.
  • The number of exabytes sold might still consistently go up, as people’s data storage needs keep growing with time, and a 500GB hard drive that was the standard in 2015, has been replaced by 1TB and 2TB hard drives.
  • However, this is not a clear indicator of growth, as the number of HDD units sold is consistently dropping, and devices with higher base storage space are also driving down the cost per bit.
  • With these factors in mind, Trefis doesn’t see a direct correlation between exabytes shipped and HDD revenues anytime soon.


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