Western Digital Buys Hitachi: What it Will Mean for the Computer and Digital Storage Industry

Western Digital has agreed to a deal to buy Hitachi, according to Bloomberg news, and this is a great moment to be a Western Digital investor. As the world's largest manufacturer of computer hard drives, Western Digital is a well-known force in computing. You've definitely purchased a Western Digital hard drive at some point in your life, unless you're reading this on your first computer, and by buying Hitachi, WD just got a whole lot bigger.

The $4.3 billion deal has a lot of computer fans wondering: what will this mean for the technology community?

First of all, it's unlikely that the quality or even the manufacturing process of Hitachi hard drives will change immediately. Likewise, Western Digital hard drives will probably stay the same-at least at first. Over time, we can expect one of the brands to differentiate and specialize, but hard drive manufacturing is an incredibly delicate process.

Electronic boards have to be specially written to allow for super-fast, super-accurate hard disk drives, and the various components of those hard drives need to be sourced and assembled in a precise manner. It's not like the guys at Hitachi will be opening a big brown box tomorrow with a brand new hard drive manufacturing machine in it; a big part of what WD bought was the technology and the trade secrets, so Hitachi will go right on making their products.

Specialization will be important at some point down the line. As Hitachi is fairly well known for its laptop hard drives, I would expect them to completely take over laptop drive manufacturing and possibly serve as a launching pad for solid state drives. That's a guess based on what happened when Seagate bought Maxtor a few years back; Maxtor sort of became their second-tier brand and focused more on external hard drives.

There is a problem with the buyout from a consumer's point of view. The hard drive market is shrinking, as Seagate Technology and Maxtor fell under the same control and the same seems to be happening here with WD and Hitachi. Competition might become more scarce, and as it takes a tremendous amount of investment and capital to begin manufacturing hard drives, it's unlikely that we'll see any new names in the market for some time.

However, the opposite point of view is that fewer hard drive companies will be better for the industry, as we'll have a clear view of the struggle between Western Digital and their rival Seagate, and both manufacturers will have to adjust to meet consumer demand for inexpensive, high quality hard drives.

What's certain is that this deal is big for the digital storage media industry and its related components, including computer manufacturers and the consumers that buy hard drives.

What do you think of Western Digital's deal to buy Hitachi? Post your thoughts in the comments section below.

Sources: Thomson, Amy. "Western Digital Agrees To Buy Hitachi Unit For $4.3 Billion," Bloomberg.com.