Storage-hardware maker Western Digital announced on Wednesday it will buy flash memory giant SanDisk for $US19 billion.
It’s just the latest multi-billion dollar deal in the tech industry this year, following Intel’s takeover of Altera, Avago’s acquisition of Broadcom, and Dell’s $US67 billion takeover of EMC.
What’s behind many of these transactions are huge shifts in the way we capture and store data — be it cell phone data, ecommerce data, or any other computer data.
Companies are looking to buy what they don’t already build, and the changes mean big tech deals are going to keep coming.
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It’s all about data.
For years, computer data was stored on hard disk drives, which have a CD-like rotating disk. Western Digital, Seagate, and Toshiba all make these.
But that technology is being displaced, and companies that pioneered it are watching sales struggle as less-bulky flash memory chips, like those used in phones, become the norm.
One type of flash memory chip is called a NAND chip, and you can find it today in memory cards, USB drives, and “solid state” drives (which look a bit like disk drives on the outside but have no disk or other moving parts on the inside). SanDisk makes these.
So, Western Digital went out and bought its way into the flash memory market by acquiring SanDisk.
Dell’s megadeal has a similar rationale behind it.
By acquiring EMC, a data storage company, Dell is taking a big step toward cutting its reliance on personal computers — not to mention moving into the smarter data storage market.
What about ‘the cloud’?
You may have heard that “cloud computing” is disrupting traditional data storage.
Yes, the cloud — meaning a network of data-storage and processing servers that are hosted on the internet instead of on local servers or computers — is part of the story.
Public cloud providers like Amazon Web Services or Microsoft Azure are also moving towards solid state technologies for their own facilities.
And it all leads to tech company mergers.
More deals are coming
Going forward, we may see more flash memory chip makers — like Micron, Hynix, or even Samsung or Intel — coming together with one of Western Digital’s disk drive competitors, like Seagate.
The shift is driven by the need to continue capturing, storing and analysing a growing amount of data.
Seen in that light, this story is not just about old technology coming together with newer technology. It’s about finding ways to continue providing cheap data services that we all use.
That’s important for everyone.
It means entrepreneurs can launch start-ups more cheaply, using more efficient data storage services. It means large-scale companies can cut down on costs. And it means you can continue to back up your iPhone inexpensively.
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