Seagate Technology Holdings plc is an Irish-domiciled data storage company. It was incorporated in 1978 as Shugart Technology and commenced business in 1979. Since 2010, the company has been incorporated in Dublin, Ireland, with operational headquarters in Fremont, California, United States.
Seagate developed the first 5.25-inch hard disk drive (HDD), the 5-megabyte ST-506, in 1980. They were a major supplier in the microcomputer market during the 1980s, especially after the introduction of the IBM XT in 1983. Much of its growth has come through its acquisition of competitors. In 1989, Seagate acquired Control Data Corporation's Imprimis division, the makers of CDC's HDD products. Seagate acquired Conner Peripherals in 1996, Maxtor in 2006, and Samsung's HDD business in 2011. Today, Seagate, along with its competitor Western Digital, dominates the HDD market.
Seagate Technology operates manufacturing and R&D operations in Thailand, with locations in Teparuk, Samut Prakan, and Korat, Nakhon Ratchasima. The facilities employ approximately 14,000 to 15,000 people, representing nearly half of the company's global workforce.
History
Founding as Shugart Technology Seagate Technology (then called Shugart Technology) was incorporated on November 1, 1978, and commenced operations with co-founders Al Shugart, Tom Mitchell, Doug Mahon, Finis Conner, and Syed Iftikar in October 1979.Seagate Technology Prospectus, September 24, 1981, p.4 The company came into being when Conner approached Shugart with the idea of starting a new company to develop 5.25-inch HDDs which Conner predicted would be a coming economic boom in the disk drive market. To avoid a lawsuit from Xerox's subsidiary Shugart Associates (also founded by Shugart), the name was changed to Seagate Technology while retaining the letters S, G and T from Shugart.
Early history and Tom Mitchell era The company's first product, the ST-506, with a storage capacity of 5 megabytes (MB), was released in 1980. It was the first hard disk to fit the 5.25-inch form factor of the Shugart mini-floppy drive. It used a Modified Frequency Modulation (MFM) encoding and in the following year released a 10 MB version, the ST-412. With this, Seagate secured a contract as a major OEM supplier for the IBM XT, IBM's first personal computer to contain a hard disk. The large volumes of units sold to IBM fueled Seagate's early growth. In its first year, Seagate shipped $10 million worth of units to consumers. By 1983, the company shipped over 200,000 units for revenues of $110 million.
In 1983, Al Shugart was replaced as president by the chief operating officer, Tom Mitchell, in order to move forward with corporate restructuring in the face of a changing market. Shugart continued to oversee corporate planning. By this point, the company had a 45% market share of the single-user hard drive market, with IBM purchasing 60% of the total business Seagate was doing at the time.
In 1989, Seagate acquired Imprimis Technology, the disk storage division of Control Data Corporation, resulting in a combined market share of 43%. Seagate benefited from Imprimis' head technology and reputation while Imprimis gained access to Seagate's lower component and manufacturing costs.
Second Al Shugart era (1990s) In September 1991, Tom Mitchell resigned as president under pressure from the board of directors, with Al Shugart reassuming presidency of the company. Shugart refocused the company on its more lucrative markets, and on mainframe drives instead of external drives. He also pulled away from outsourcing component production overseas. This allowed Seagate to better keep up with demand for PCs, which increased extremely rapidly in 1993 across the market. This included a domestic partnership with Corning Inc., which began using a new glass-ceramic compound to manufacture disk substrates. In 1991, Seagate also introduced the Barracuda HDD, the industry's first hard disk with a 7,200 RPM spindle speed.
In May 1993, Seagate became the first company to cumulatively ship 50 million HDDs over its firm's history. The following year, Seagate Technology Inc moved from the Nasdaq stock exchange to the New York Stock Exchange, trading under the ticker symbol SEG. Upon leaving, the company was the 17th-largest company in terms of trading volume on the Nasdaq exchange. In 1996, Seagate merged with Conner Peripherals to form the world's largest independent hard-drive manufacturer. Following the merger, the company began a system of consolidating the components and production methods within its production chain of factories in order to streamline how products were built between plants.
In May 1995, Seagate Technology acquired Frye Computer Systems, a software company based in Boston, Massachusetts. This company developed the LAN monitoring software kit The Frye Utilities for Networks, which won PC Magazine's "Editor's Choice" award in 1995.
In 1996, Seagate introduced the industry's first hard disk with a 10,000 RPM spindle speed, the Cheetah 4LP. By 2000, this product increased to a speed of 15,000 RPM with the release of the Cheetah 15X. In May 1997, the High Court of Justice in England awarded Amstrad PLC $93 million in a lawsuit over reportedly faulty disk drives Seagate sold to Amstrad, a British manufacturer and marketer of personal computers. That year, Seagate also introduced the first Fibre Channel interface hard drive.
In July 1997, Seagate Technology agreed to acquire San Jose, California-based startup Quinta Corporation for up to $325 million ($230 million in cash plus up to $95 million in performance milestones). Quinta developed Optically Assisted Winchester (OAW) laser technology purported to bypass traditional magnetic storage limits and thereby increase hard drive data density
In 1997, Seagate experienced a downturn, along with the rest of the industry. In July 1998, Shugart resigned his positions with the company. Stephen J. "Steve" Luczo became the new chief executive officer, also joining the board of directors.
First Steve Luczo era (1998–2004) Luczo joined Seagate Technology in October 1993 as Senior Vice President of Corporate Development. In March 1995, he was appointed Executive Vice President of Corporate Development and chief operating officer of Seagate Software Holdings. In 1996, Luczo led the Seagate acquisition of Conner Peripherals, creating the world's largest disk drive manufacturer and completing the company's strategy of vertical integration and ownership of key disk drive components. In September 1997, he was promoted to the positions of President and Chief Operating Officer.
In 1998, the board appointed Luczo as the new CEO and Seagate launched a restructuring effort. Historically, Seagate's design centers had been organized around function, with one product line manager in charge of tracking the progress of all programs. In 1998, Luczo and CTO Tom Porter called for an organizational redesign of design centers into core teams focused on individual projects, in order to meet the corporate objective of faster time to market. As the CEO, Luczo decided to increase investment in technology and to diversify into faster-growing, higher-margin businesses. He decided to implement a highly automated platform strategy for manufacturing. Between 1997 and 2004, Seagate reduced its headcount from approximately 111,000 to approximately 50,000, reduced its manufacturing factories from 24 to 11, and reduced design centers from seven to three. During this period, Seagate's output increased from approximately 9 million drives per quarter to approximately 20 million drives per quarter.
In 1998, the company's Seagate Research facility was also established in Pittsburgh, a $30 million investment that focused on future technologies and prototypes. Technology developed by the facility would include devices like the hard drive disk for Microsoft's first Xbox.
In 1999, Seagate shipped its 250 millionth hard drive.
In May 1999, Seagate sold its Network & Storage Management Group (NSMG) to Veritas Software in return for 155 million shares of Veritas' stock. With this deal, Seagate became the largest shareholder in Veritas, with an ownership stake of more than 40%.
Re-privatization (2000) In 2000, Seagate became a private company again. Luczo led a management buyout of Seagate, believing that Seagate needed to make significant capital investments to achieve its goals. He decided to turn the company private, since disk drive producers had a hard time obtaining capital for long-term projects. The company was incorporated in Grand Cayman and stayed private until it re-entered the public market in 2002.
In early November 1999, Luczo met with representatives of Silver Lake Partners to discuss a major restructuring of Seagate. After two failed attempts to increase Seagate's stock price and unlock its value from Veritas, Seagate's board of directors authorized Luczo to seek advice from Morgan Stanley in October 1999. In early November 1999, Morgan Stanley arranged a meeting between Seagate executives and representatives of Silver Lake Partners. On November 22, 2000, Seagate management, Veritas Software, and an investor group led by Silver Lake closed a complex deal that privatized Seagate. At the time, this was the largest buyout ever of a technology company. The total deal, worth about $20 billion, included the sale of its disk-drive operations for $2 billion to an investor group led by Silver Lake Partners. The goal of the deal was to unlock the value of the 33% ownership stake Seagate had in Veritas, which had put the value of Seagate's stock at around $33 billion even though its market cap was only $15 billion.
Following the relocation to the Cayman Islands in 2000, the legal name of a holding company was simplified to Seagate Technology. The de facto operational company, incorporated in Delaware, became a limited liability company (LLC) named Seagate Technology LLC and operates to this day as such.Seagate Website Use Terms and Conditions
Both the Stanford Graduate School of Business and the Harvard Business School have written multiple case studies on the Seagate buyout and turnaround. In addition, several leading management books cite the Seagate turnaround.
Re-emerging as a public company (2002–2010) Luczo became the chairman of the board of directors of Seagate Technology on June 19, 2002. In 2003, he accepted an invitation from the New York Stock Exchange to join its Listed Companies Advisory Committee.
In 2003, Seagate re-entered the HDD market for notebook computers and provided the 1-inch hard drives for the first iPods. This led to a trend of digital devices being created with progressively more and more memory, especially in cameras and music devices. In September 2004, The New York Times called Seagate "the nation's top maker of hard drives used to store data in computers", following the company forecasting its quarterly revenue above Wall Street estimates.
In 2004, the company separated the roles of chairman and CEO. Luczo resigned as the Seagate CEO on July 3, but retained his position as chairman of the board of directors. Bill Watkins became CEO.
At the beginning of 2006, Forbes magazine named Seagate its Company of the Year as the best managed company in the United States. Forbes wrote that, "Seagate is riding the world's gadget boom. Its 1-inch drives are the archives for cameras and MP3 players." It also credited Seagate as being the company that "sparked the personal computer revolution 25 years ago with the first 5.25-inch hard drive for the PC".
In April 2006, Seagate announced the first professional Direct-To-Disc digital cinema professional video camera aimed at the independent filmmaking market. This technology used Seagate's HDDs.
In 2007, Seagate created the hybrid drive concept.
In 2007, Seagate announced the "phase out" of parallel ATA hard disk drives by early 2008.