Santa Ana’s SimpleTech has its third owner in as many years.
And the maker of storage drives for consumers is far from the company it used to be in Orange County.
SimpleTech once was part of Santa Ana-based STEC Inc., a publicly traded maker of flash memory-based storage devices for corporations and industrial users.
STEC sold off its ailing consumer unit to San Mateo-based Fabrik Inc. for $43 million in 2007.
Fabrik, which started in 2005, turned SimpleTech around in just a few years and made SimpleTech’s lineup of sleek, colorful external disk drives a big seller with consumers.
Last year, Fabrik expanded by buying Santa Monica’s G-Technology Inc., a maker of external drives for small businesses and professionals.
Enter Hitachi
That drew the attention of Hitachi Global Storage Technologies, a venture of Japan’s Hitachi Ltd. and IBM Corp. that bought Fabrik earlier this year for undisclosed terms.
Since then, a lot has changed for SimpleTech.
SimpleTech now is about a third of the size it was under Fabrik with about 50 workers here.
Most employees work in sales, marketing and tech support. All the administrative functions have been relocated to Hitachi GST’s headquarters in San Jose.
The last of the manufacturing work done here was sent to Asia more than a year ago.
Development was moved from Fabrik’s San Mateo office to Hitachi GST’s offices.
Fabrik managed to turn SimpleTech into a must-have for Hitachi, which competes with Lake Forest’s Western Digital Corp. and Scotts Valley-based Seagate Technology LLC for drives that go into computers, external drives and drives for consumer electronics.
“Hitachi did not have this line of business and it was something they were strategically interested in getting into,” said Mike Cordano, former Fabrik chief executive who now heads Hitachi’s branded product division. “That was the overriding driver of the deal.”
Playing Catch Up
Hitachi was a latecomer to external storage drives for consumers sold at stores and online.
“They tiptoed into it a bit, but they never really had any presence,” said John Rydning, an analyst at Framingham, Mass.-based market tracker IDC Corp. “They missed the boat when this market emerged in 2004 and they are playing catch up, no question. Adding the SimpleTech brand is a good move for them to get a foothold in the market.”
External drives for consumers, sometimes called branded drives, are one of the fastest-growing products in the industry as consumers look to secure and store more types of data than ever before, including video, photos and music.
Growing Market
IDC estimates that the worldwide personal storage market will grow by more than 50 million drives during the next four years.
Disk drive makers also like external storage gear because it gives them a chance to market their brands directly to consumers, Rydning said.
“It’s an opportunity for them to get a lot closer to the consumer and also allows them to diversify and spread out a bit,” he said. “Those elements have made it pretty attractive to the disk drive guys.”
Western Digital has the top market share for branded products, which include its My Passport and My Book products, followed by Seagate.
Market dominance is reversed for computer drives.
Seagate is the No. 1 maker of disk drives for computers, with 30.9% of the market in the second quarter. Western Digital is nipping close at its heels with 30.4%. Hitachi weighed in at a nearly 17% share.
With SimpleTech under its belt, Hitachi is hoping to compete head-to-head in branded products with Western Digital and Seagate.
“We certainly see those two as competitors,” Cordano said. “It’s a matter of us deploying our strategy in multiple segments and globally.”
As part of Hitachi, SimpleTech has expanded its reach.
Global Expansion
Before the deal, it primarily sold drives in North America. Now it has expanded into Hitachi’s sales operation in Europe with Asia in the works for the year’s end.
“You would expect that we can grow our geographic presence and our market share to be more reflective of our position in the broader hard drive market,” Cordano said. “We see very good early progress down those lines.”
Hitachi has kept SimpleTech’s brand name marketed under Hitachi’s umbrella. It no longer uses the Fabrik name.
Last month Hitachi announced three branded products, including the SimpleTough portable USB drive, a water- and shock-resistant external flash drive; the colorful SimpleDrive mini portable USB drive; and the SimpleNet network storage adapter.
