Hard disk drive (HDD) manufacturer Western Digital Corp. (WDC) announced the shipment of WD Blue, a 2.5 inch 7 mm HDD with 1 TB (Tera byte) capacity. WD Blue is for slimmer and lighter notebooks and can also be used in standard notebooks with 9.5 mm drive slots.
As the new drives can be used in standard notebooks, users will only have to buy a high-capacity hard drive, rather than a new Ultrabook or a high-performance slimmer notebook.
With the availability of WD Blue, PC manufacturers like ASUSTEK and Acer are quite enthusiastic as they can offer slimmer and lighter mobile computing systems along with high capacity storage options. Previously, customers had to choose between sleek design and high storage capacity systems.
The company seems optimistic about the launch of Intel Corp.’s (INTC) Haswell processor, which promises high-performance computing experience to users. This could have a positive impact on the demand for laptops, which in turn could boost demand for its 7 mm HDD.
WD Blue HDDs are shock proof, quiet, less heat generating and high-performance drives and are available at a price of $139.0. The drives carry a warranty period of two years.
Western Digital, however, cannot afford to be complacent with the thinnest HDD in its kitty as its archrival Seagate Technology plc (STX) has also announced the shipment of an ultra-thin (5 mm) 2.5 inch laptop HDD. The 500 GB drives are available at a price of $89.0.
Despite stiff competition, we see Western Digital’s relentless endeavour to shift focus toward high margin enterprise drives to offset slower PC demand. Last week, the company introduced WD Se (an enterprise class drive for data centers) and Travelstar 5K1500 (for notebooks, external drives, gaming consoles and all-in-one PCs).
Apart from this, Western Digital also announced that it will join forces with SanDisk Corp. (SNDK) to introduce a solid state hybrid drive (SSHD). The drive will feature SanDisk’s flash memory technology and Western Digital’s hard drive technology. The new SSHD namely WD Black will offer hard drive-like capacity, slim form factor and flash memory-like fast performance.
Western Digital has limited exposure to high-end corporate desktop and enterprise server markets compared to its rival Seagate. But we believe that with the introduction of WD Black (SSHD) in association with SanDisk and recently introduced drives, Western Digital will be able to grow its market share in enterprise space.
It has also been noticed that the company is slowly shifting toward consumer electronics, branded and enterprise products. We believe that this will prove beneficial for WD as dependence on the PC market will be less.
We are also encouraged by Western Digital’s impressive third quarter 2013 earnings, which surpassed the Zacks Consensus Estimate.
Currently, Western Digital has a Zacks Rank #2 (Buy).
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