Lake Forest’s Western Digital Corp., best known for disk drives for laptops and consumer electronics, is pushing a device for TVs that lacks its signature drive altogether.
A few months ago the company quietly rolled out its WD TV HD Media Player, a little black box that allows you to connect other devices and play their digital files on a television or stereo.
Think of viewing a slideshow of pictures from a digital camera, or listening to songs from an iPod.
“It’s the first product we’ve launched that doesn’t have a hard drive in it,” said Dale Pistilli, vice president of marketing for Western Digital’s retail division based in Mountain View.
Devices link to WD TV via two USB ports in the back of the box. Software on the box reads the devices and organizes the files on screen.
“We found that a lot of our customers who were storing their personal media collections on external hard drives wanted to be able to enjoy their high-definition content on their TVs. It’s the best screen in the house,” Pistilli said.
The device, which comes with a remote control, has seen some positive reviews and is selling faster than the company thought it would, Pistilli said.
“We are increasing our capacity,” he said. “This has been a niche market and it’s selling stronger than we originally expected.”
Western Digital is going head-to-head with competing products that have been out for a while.
They include Apple Inc.’s Apple TV and Fountain Valley’s D-Link Systems Inc.’s PC-on-TV Media Player, which streams high-definition digital files from a PC to a television via a wireless network.
Western Digital’s little black box has a few things going for it at a time when consumers are reining in their spending on gadgets and entertainment.
For one, it’s relatively cheap. WD TV sells for about $130, with some online stores offering it for as little as $100. Both D-Link’s media player and Apple TV go for more than $200.
“I think a lot of people have said, ‘For $129, I’ll try it out,'” Pistilli said. “It’s not a price point where you would need to have multiple people in the household sign off on the purchase. It has the wife-acceptance factor.”
Second, the network-connected devices are a bit of “hard sell,” Pistilli said.
“With network adapters, it accesses a drive that’s across the house. People have a hard time understanding that concept,” he said. “It’s a harder sell and it can be more difficult to stream a high-definition signal from some distance.”
The TV product helps Western Digital get its brand out of the office and into people’s living rooms.
“We find that people who are buying the WD TV are also buying the (Western Digital) portable drives,” Pistilli said. “The box never gets filled up, so you can always buy more drives,and of course we like that.”
The device builds on Western Digital’s external drives for consumers and small businesses, which are sold in stores and online.
The company has a handful of brands including My Passport (a line of portable drives), My Book (desktop drives) and Elements (a no-frills line of drives).
Western Digital also sells a specialized drive that boosts the space allotted for recording TV programs on a digital video recorder, called My DVR Expan-der.
Branching out into entertainment taps into a growing part of the relatively mature storage market, said Richard Kugele, a Needham & Co. analyst in Boston.
“The fastest growing segment of the storage world is now with the consumer,” he said.
Drives sold to consumers make up roughly a quarter of the market and, until recently, were growing at about 20% annually, according to Kugele.
“The fact that these drives have nothing to do with the PC food chain actually make it kind of a recession-buffer,” he said.
For the three months through December, Western Digital reported sales of $396 million for its branded products, which include WD TV and all consumer drives sold in stores.
That’s roughly 20% of its nearly $2 billion in revenue for the December quarter, up from 18% during the same period a year earlier.
Western Digital’s Pistilli declined to say how many of the WD TVs the company has sold.
The devices likely have better profits for Western Digital, analyst Kugele said.
“Their margins are already very good on the external drives,” he said. “With no hard drive in the TV product, their margins are significant.”
Western Digital isn’t new to the entertainment market.
In the late 1990s it had a subsidiary called Keen Personal Media Inc. that made set-top box products and put out one of the first DVRs.
“It’s not a huge leap for them,” Kugele said. “Even back in the 1990s they knew that TV was going to need some type of recording device.”
Western Digital eventually shuttered the unit in 2002, but it still sells disk drives to other manufacturers of DVRs.
