Wave Systems Corp. (fka WAVXQ)

[Fullmoon]

Western Digital says the smart money is still on hard drives

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When solid state drives (SSDs) started to get cheaper per GB, many of us wondered what the hell incumbent hard disk drive (HDD) leaders such as Seagate and Western Digital (WD) were doing allowing the likes of Intel, Kingston and Corsair to take their market away from them.

But the wholesale move from HDD to SSD hasn't happened for the simple reason that the cost per GB of HDDs remains a lot lower and there's only so much mainstream consumers are prepared to pay for the performance and power consumption benefits of the SSD. A good case can be made for paying that extra, but it's still extra.

Of course the HDD incumbents have hedged their bets by buying into SSDs, but those remain primarily an enterprise play. All reasonably-priced PCs are still going to run on HDDs, but WD at least still sees a lot of growth potential in the external HDD market. We spoke to WD head of consumer branded products, Jim Welsh, to find out why.

"Attach rates [of external HDDs] are still very low, so there's a huge opportunity," said Welsh. "People should at least be backing-up their stuff." It seems that many end-users still aren't sold on the benefits of shelling out on an external HDD, despite them being cheaper and more capacious than ever.

For this reason Welsh was over in the UK on a channel push. Retail remains an important channel for WD because it's dependent on knowledgeable salespeople to explain the necessity of buying an external HDD to back up and store the exponentially increasing amount of data we're all accumulating. It's also a good margin-maker for retailers who make little on the sales of systems.

"Our strategy is to focus on the end-user and where they buy their products," said Welsh. "We want them to understand how they can unleash the power of storage." WD has direct relationships with its biggest retail partners in the UK - Dixons and Amazon - but also works with a number of disties.

And WD definitely has its eye on emerging sectors. We asked how worried Welsh is about the threat to WD TV - a family of media players designed to work with WD drives - from the innovations coming from Apple and Google. "Consumers have really grasped the concept of time-shift viewing, but having a big name is by no means an assurance you will do well," he said. "WD TV has outsold Apple TV in the US."

Another emerging category that WD is excited about is tablets. Not because it expects many of them to necessarily contain WD drives, but precisely because their internal storage is generally inadequate, and it anticipates demand from tablet owners to dump their media externally on a regular basis.

To conclude we asked Welsh if he's not at all concerned about the threat of SSDs. "We have that technology in-house, but we still haven't found the price-point for mass consumer adoption," he said. "They will continue to coexist in much the same way they do today."