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Maxtor still available for system builders

Seagate bets a lower-priced line - boosted by Maxtor's first laptop hard drives - will help it gain markets

After swallowing Maxtor Technology earlier this year, Seagate decided to keep Maxtor drives in the retail market. Now it has decided to also keep making that company’s DiamondMax desktop line for original equipment manufacturers and integrators.

In addition, next month when the Maxtor lineup is refreshed it will for the first time include laptop hard drives for those building notebooks and specialized small-drive systems.

Maxtor’s drives will be priced lower than Seagate’s Barracuda, Momentus and Cheetah line, said Marc Jourlait, Seagate’s vice-president of segment marketing. The Seagate name will command a “premium” for having “leading edge features” that won’t be in the Maxtor line for some time, as well as a longer warranty.

The strategy, Jourlait said, will allow Seagate to offer original equipment makers and system builders with lower-priced models it didn’t have before against competing hard drive manufacturers.

“If they (competitors) want a knife fight we’ll bring a knife, instead of a tank,” he said.

The news was praised by Royson Ng, president of Samtack Computer Group of Markham, Ont., a Maxtor distributor and system builder.

“By having Maxtor back they will regain our trust and support,” he said.

John Rynding, IDC’s research manager for hard drives and components, said keeping the Maxtor line enables Seagate to leverage a well-known brand name, especially in markets where Seagate’s marque isn’t as popular.

It also gives Seagate the ability to differentiate its drives, rather than have them all under one name, he said.

“The risk is competitors will try to blur the differences between the Seagate and Maxtor brands,” he added. “It means Seagate will have to continue to bring out new features that distinguish the products.”

According to IDC figures, in the first quarter (before the Maxtor purchase was finalized) Seagate led the market in units shipped with close to a 29 per cent share, followed by Western Digital with 18 per cent, Hitachi with 14 per cent and Maxtor with 11 per cent. Other hard drive makers include Samsung, Toshiba and Fujitsu.

Compared by revenue, Seagate led with about 31 per cent of the market in the first quarter, followed by Western Digital and Hitachi, which each had a 15 per cent share. Maxtor was third with 12 per cent.

Seagate has yet to reveal if it will trim the number of distributors it has gained with the addition of Maxtor. But “Canada is a country where we’d like to grow,” Jourliat said, “so I think there’s opportunity to bring in partners and increase our coverage.

“With different price points we’ll be able to offer a different set of programs – in particular a quantity discount structure which we think will enable some new sub-distributors and integrators that up until now we haven’t had access to but that Maxtor’s been very successful with.”

Market segments
The two brands are being positioned at what Seagate believes are different markets – Seagate drives for those willing to pay a higher price for the latest technology and configuration help, and Maxtor drives for those looking to buy drives in volume and more concerned about price.

The difference between the Seagate and Maxtor lines will be seen in features (for example, cache size), support (Seagate drives will offer special support for OEMs and system builders), capacities (initially, for example, Maxtor drives will only go up to 320GB) and warranties (the traditional five years for Seagate, three for Maxtor).

As a result, Jourlait said, Seagate drives will cost more.

But the strategy will allow system builders and OEMs to pick the level of service and support they want, he said.

And Seagate also hopes it will allow it to go after partners, integrators and sub-distributors it didn’t have because of the higher price of its drives.