As many industry observers expected, the two major pending storage deals, Western Digital – Hitachi and Seagate – Samsung are attracting antitrust scrutiny. Regulators in the US are looking at the deals, and now the European Union is looking into the industry consolidation as reported this week.
Regulators are looking at the deals because the combined market share of the two firms, if both deals go through would be approximately 90%. Hard disk manufacturing is one industry that scales very well with economies of scale so with the two big firms being four to five times as big as the potential #3 (Toshiba at 10%), the two firms will effectively have a duopoly.
For drive consumers, this means that the deal closures will likely be delayed by a period of time. Between now and potential deal closure, the scrutiny will likely mean that the market will see stiff price competition. If the deals do close, it is likely that Toshiba will come under a lot of pressure and there will be less competition driving prices quickly lower in the long run.
Stay tuned on these deals as they may prove exciting to watch.
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