Seagate's Strategy to Leverage AI Demand

Market Positioning and Differentiation

Seagate is leveraging AI demand by focusing on high-capacity drives, strong nearline cloud demand, and financial discipline. Their strategy includes product transitions, advancing areal density growth, and maintaining profitability, positioning them to deliver value to both customers and shareholders.

"In this environment, we are working with our customers to obtain better demand visibility and address their exabyte growth needs through product transitions while maintaining a strong focus on profitability and supply discipline. As noted last quarter, we are executing the qualification and ramp of two new high capacity drives." --- (STX, earning call, 2024/Q4)

"I'll share further details around our product execution momentarily, but first I'll briefly review the current market trends. As I highlighted a moment ago, we are seeing strong nearline cloud demand growth from customers globally." --- (STX, earning call, 2024/Q4)

"Our performance is a function of both improving end-market demand and the decisive actions we implemented throughout the downturn to strengthen our financial profile heading into the recovery." --- (STX, earning call, 2024/Q3)

"By continuing to focus on the fundamentals, the strong financial and operational execution and advancing our areal density growth road map, Seagate is well positioned to deliver value both to our customers and our shareholders, and we look forward to keeping you posted on our progress." --- (STX, earning call, 2024/Q4)

"Within the mass capacity market, revenue outpaced exabyte growth, increasing 11% sequentially to $1.2 billion with nearline cloud demand more than offsetting the slight decline in the VIA market." --- (STX, earning call, 2024/Q3)

Competitive Landscape in AI Market

Seagate is strategically delaying actions by a few months to better position itself in the competitive AI market. The hyperscaler industry is adjusting capacity to meet AI demand, with potential overbuilding risks. Key players like Microsoft and Amazon are driving AI innovations, while Seagate focuses on competing with Flash technology.

"But for us, considering where we are from a competitive landscape, pushing out 2 or 3 months is a no brainer." --- (STX, conference, 2024/06/04)

"Ross Sandler: Hi, everybody. Just two questions on the AI CapEx. So it looks like from the outside at least, the hyperscaler industry is going from kind of an under bill situation this time last year to better meeting the demand with capacity right now to potentially being overbuilt next year if these CapEx growth rates keep up." --- (GOOG, earning call, 2024/Q2)

"Wonderful. Great. Thank you for that. And so you identified some of the key trends in the industry from AI and just general trends." --- (MSFT, conference, 2024/06/06)

"In AWS, we helped customers navigate an uncertain ensure At the same time, we leveraged our technology and experience to introduce many generative AI related innovations for our customers." --- (AMZN, event transcript, 2024/05/22)

"I know it's nascent, but if you can comment on that, that would be great. And then related to that, I was hoping you could opine on your ability and the broader ACD industry's ability to compete with Flash in AI." --- (STX, earning call, 2024/Q3)

AI-Optimized Product Offerings

Seagate's AI-optimized product offerings focus on breakthroughs in areal density, energy efficiency, and space optimization with Mozaic 3+, addressing the growing demand for AI-related storage solutions. The company is also enhancing infrastructure for AI data generation and on-prem storage, crucial for video applications and AI snapshotting.

"Seagate's Global VP of Brand Strategy, Rosalina Hiu, shared how Mozaic 3+ breakthroughs in areal density, energy efficiency and space optimisation will help enterprises scale for AI success." --- (STX, Twitter, 2024/07/05)

"And what I would say in general, is that there are applications that are definitely, I'll call it, cold storage, colder storage, or big data applications that are coming, video applications, for example, that we are very encouraged by, and we are seeing purchase orders now from cloud service providers and so on that actually say AI on them, which is -- it wasn't true six-months ago, but given all the creativity in this application space, I'm really excited about it." --- (STX, earning call, 2024/Q3)

"As you know, focus mainly on creating the infrastructure for AI and so being able to generate data." --- (STX, conference, 2024/06/04)

"And I think they will come with video creation, video storage, video consumption at the edge, exactly to your point. More importantly, I think a lot of AI applications will need snapshotting in order to trust them." --- (STX, earning call, 2024/Q4)

"We think that over time on-prem is going to grow, because a lot of the cool applications that people are talking about, read AI applications, will need on-prem storage, as well for various reasons, snapshotting and checkpointing of the data and just making sure you feed all the AI engines with mass data at the edge." --- (STX, earning call, 2024/Q4)

Strategic Partnerships and Collaborations

Seagate is actively pursuing strategic alliances, acquisitions, joint ventures, and investments to leverage AI demand. Collaborations with industry peers, customers, partners, and governments are central to their strategy, as evidenced by their circularity programs and partnerships, such as the one with eBay to expand hard drive recertification.

"In addition, we may selectively pursue strategic alliances, acquisitions, joint ventures and investments, which may require additional capital." --- (STX, sec filing, 2024/Q3)

""By collaborating with industry peers, customers, partners, and governments, we can collectively enable circularity and drive positive change." Additionally, in FY2023, Seagate extended the life of approximately 1.19 million hard drives and solid-state drives (SSD) through its circularity program." --- (STX, press release, 2024/04/22)

"In our efforts to be a responsible, sustainable marketplace, this collaboration shows that we all have a part to play. The new Seagate storefront on eBay offers various hard drive options that can be trusted because they are recertified by Seagate and come with a limited warranty." --- (STX, press release, 2024/06/18)

R&D Investments in AI Technologies

Seagate is heavily investing in R&D to innovate storage technologies, such as Mozaic 3+, to meet AI data storage demands. Their focus includes enhancing hard drive areal density to handle the expected surge in AI-generated data, demonstrating a strategic commitment to leveraging AI opportunities.

"I look forward to his contributions as we continue to innovate breakthrough storage technology to capture the tremendous data growth opportunities ahead." About Seagate Technology Seagate Technology is a leading innovator of mass-capacity data storage." --- (STX, press release, 2024/06/10)

"Seagate will be at COMPUTEX 2024! In addition to showcasing our Mozaic 3+ technology, global VP of Brand Strategy Rosalina Hiu will share more about its impact on AI data storage." --- (STX, Twitter, 2024/05/16)

"Rose Hiu, Seagate VP of Brand Strategy, discussed the importance of hard drive areal density in meeting AI storage challenges as Generative AI is expected to produce 100ZB of data in the next 4 years." --- (STX, Twitter, 2024/06/06)

"Our Global VP of Brand Strategy, Rosalina Hiu, will be at Computex 2024 speaking on Mozaic 3+ and its implications for AI data storage." --- (STX, Twitter, 2024/06/05)

"Risk Factors” of this Quarterly Report on Form 10-Q. Cash Requirements and Commitments Our liquidity requirements are primarily to meet our working capital, product development and capital expenditure needs, to fund scheduled payments of principal and interest on our indebtedness and to fund our quarterly dividend and any future strategic investments." --- (STX, sec filing, 2024/Q3)

Target Customer Segments for AI Solutions

Seagate's target customer segments for AI solutions include businesses needing high-end storage for generative AI, cloud customers generating significant AI revenue, those requiring high-performance AI infrastructure, and companies customizing AI models for specific business applications.

"Storage delivered growth again this quarter, including growth in high-end storage tied to the z16 cycle and solutions tailored to protect, manage, and access data for scaling generative AI.Looking at infrastructure profit, we delivered solid gross profit margin expansion and segment profit accelerated" --- (IBM, earning call, 2024/Q2)

"As Sundar noted year-to-date, our AI infrastructure and generative AI solutions for cloud customers have already generated billions in revenues and are being used by more than 2 million developers." --- (GOOG, earning call, 2024/Q2)

"But then we wrapper that with networking investments as well as newly talked about liquid cooling to bring together an AI infrastructure that is the most performant for our AI solutions to run on top of." --- (MSFT, conference, 2024/05/21)

"This lets customers pick the #AI models that best fit their needs to easily and securely customize GenAI applications specific to their business." --- (AMZN, twitter, 2024/05/23)

"Salesforce, which lets customers choose the LLMs that best suit their needs through its Bring Your Own Large Language Model strategy, plans to allow customers to integrate their LLMs with the watsonx.ai platform and Salesforce Einstein 1 Studio, a collection of low-code AI builders." --- (IBM, press release, 2024/05/21)