Fujitsu and Western Digital: No Deal

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For months, rumors have been swirling that storage developer Western Digital was looking to acquire Fujitsu’s hard drive business…but now the Japanese business daily Nikkei reports that the deal is off, due to the companies’ inability to agree on a price and a sudden increase in the value of the Japanese yen.

Fujitsu has been in the hard drive storage business for many years, and currently accounts for about 20 percent of the hard drive market. But the company has for some time considered the business something of a money-sink, as development and manufacturing costs for storage technology continue to climb but product revenue continues to drop. Fujitsu pulled out of the desktop hard drive business way back in 2001, instead choosing to focus on mobile and enterprise/server solutions. And guess who picked up Fujitsu’s desktop drive business back in 2001? That would be Western Digital.

The Nikkei trade paper says Fujitsu is believes to have asked for $550 million for the hard drive business, including both Japanese and overseas operations, and wanted a deal that would enable most of its storage business employees to keep their jobs. Back in October, Fujitsu was reported to be asking more than $700 million for the business.

Acquiring mobile and enterprise-level storage operations would potentially bolster Western Digital’s line of consumer-oriented desktop and external hard disk products, although the company currently offers enterprise and mobile solutions of its own. The main value for Western Digital in acquiring Fujitsu’s business would seem to be a substantial increase in market share…although all storage vendors (including Hitachi and Toshiba) are largely playing catch-up to Seagate, which accounts for as much as 60 percent of the worldwide hard drive market.