Storage solutions provider Seagate Technology (STX) has entered into a strategic alliance with Baidu Inc. (BIDU), a Chinese-language Internet search provider.
The collaboration is aimed at advancement of new technology, improvement in storage quality and increasing reliability of Big Data analysis, Cold Storage and Shingled Magnetic Recording (SMR). This arrangement brings together two prominent players who are teaming up not only to serve China's growing new cloud market but to also give a boost to the platform.
According to the agreement, the two companies agreed to give priority to each other during the procurement/sale of storage solutions for Baidu servers and storage facilities.
Baidu is a Chinese-language Internet search provider, established in 2000, with its headquarters in Beijing, China. The company also has offices in Shanghai, Guangdong Province, Japan, USA, Thailand, Brazil, Egypt and Indonesia. BIDU’s mission is to provide the best and most equitable way for people to find what they are looking for, leading many to call the company the ‘Google of China’.
Big Data has become one of the biggest buzzwords in the technology sector. The term refers to management of vast quantities of unstructured data. Big Data storage needs to be able to handle capacity and provide low latency for analytics work.
According to market research firm IDC, Big Data is expected to generate $16.1 billion in 2014, growing 6 times faster than the overall IT market. The firm also forecasts that the Big Data-related technology and services market will continue to grow at a 27% CAGR to $32.4 billion through 2017.
Considering this, there remains no doubt that this collaboration is a big positive for Seagate. With Baidu’s widely-accepted product lines, Seagate will find it easier to penetrate the consumer storage market, specifically in China.
Seagate recently completed the acquisition of the Accelerated Solutions Division (ASD) and Flash Components Division (FCD) from Avago Technologies. The acquisition will not only boost Seagate’s enterprise-class PCIe (Peripheral Component Interconnect Express) flash offerings but also provide solid state drive (SSD) controller capabilities.
We believe that the secular growth of digital data, modest growth in the total addressable market and higher demand for storage will remain growth catalysts, going forward. Additionally, synergies from acquisitions and product innovations continue to drive growth.
The company’s significant exposure to high-end corporate desktop and enterprise server markets also remains a positive. Nonetheless, competition from Western Digital Corp. (WDC) and SanDisk Corp. (SNDK) is a concern, going forward.
Currently, Seagate has a Zacks Rank #3 (Hold).
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