Forbes talks about media storage

Storage Hits the Family Room
Lee Gomes, 02.05.10, 02:00 PM EST
Forbes Asia Magazine dated February 08, 2010
Disk-drive companies are betting on a new breed of gadgets.
image
Seagate's FreeAgent Theater media player links your PC to the TV.

Compared with Samsung, Sony and Apple, disk drive makers are hardly glamorous players in the consumer electronics world. Yet as they stood smiling at their display booths and executive suites at the gigantic Consumer Electronics Show in Las Vegas in early January, executives of storage providers like Seagate and Western Digital could feel right at home. Ordinarily storage products attract little of the excitement surrounding the iPods they make possible. Now, though, Seagate, Western Digital and the others have their own entries in the sweepstakes of cool. They are selling living room products called media players.

It's doubtful whether vendors of these $150 items will ever match Apple's success, since the world of consumer electronics requires the sorts of resources in design and marketing that a magnetic platter company is not likely to have. But merely adding them to the lineup is a reminder of how the biggest trends with consumers--notably, the fascination with video, both the Hollywood and cell phone variety--play to the strengths of the storage industry.
Article Controls

It's a big reason storage companies have roared out of last year's slump. Disk drives--which keep your data stored in your computer when it's turned off--remain a cyclical business. At the moment we're in the positive part of the cycle. Shares of industry leader Seagate have quadrupled in the last year to $17.90; it posted a net loss of $3.1 billion on $9.8 billion in revenues in the year through July 3. Western Digital, the third-largest disk drive maker, saw its shares quadruple since November 2008.

These companies, along with storage box maker Iomega (which was bought by EMC in 2008), have all recently introduced media players designed to pair with the big high-definition TV sets that are showing up in family rooms. The media players are the size of a tissue box and attach to a TV much like a DVD player does. Inside the casing they are essentially Linux computers, with their geeky innards hidden by a user-friendly interface and operated with a remote control.

While these media players can connect to Internet sites like YouTube and Netflix to access streaming video, their main purpose is to give customers a way to play on their living room TVs all the movies that they happen to have handy in digital form on their PCs.

Much of the demand for new devices comes from young Web-savvy users who get their movies from illegal download sites like Pirate Bay instead of Netflix or Redbox. (The same is true for Apple, since the iPod wouldn't have been nearly as big a hit if its users had purchased music only legally.) The new media players haven't yet fully caught on in the U.S. "But if you walk around big stores like FNAC in Europe, you see stacks and stacks of them," says Jonathan Huberman, chief executive of Iomega, which is marketing a $150 player. "It's a very interesting business for us." (The products are now being rolled out in Asia; the Seagate entry, for instance, is arriving soon in China.)