This month marks the 30th anniversary of Seagate Technology, the worldwide leader in hard-disk drives and storage solutions.
Seagate and the electronics industry have grown significantly over this period. Looking back, it's interesting to review how the business grew and transformed itself. In many ways, it reflects changes in business philosophy and yet, retains a few key themes.
Seagate opened its doors in 1979, shipping the industry's first 5.25-inch hard drive. By 1993, it had shipped its 50 millionth drive, by 1999 its 250 millionth and by 2008 its billionth. Seagate's operations in Asia were key enablers for that growth. Key themes can be noted chronologically in the development.
Timing and being first is crucial. By 1982, Seagate opened manufacturing facilities in Singapore. By 1983, it opened facilities in Thailand. International Business Machines (IBM, later Hitachi Global Storage Technology), Fujitsu and Micropolis followed in 1988. ReadRite (later Western Digital Corp (WDC)) followed in 1991, Maxtor in 1996 and WDC in 2000. The move was primarily driven by skilled, but inexpensive direct labour. Seagate, and the industry in general, moved to take advantage of that opportunity.
Vertical integration and expansion. In the 1990s, demand grew as personal-computer users expanded. Seagate grew with that demand. Vertical integration was one of the key strategies, which means Seagate designed and manufactured directly most of the elements of the drive itself. The processes were still fairly manual, relying on the skill and sheer number of operators. For example, by 1997, Seagate was the largest private sector employer in Thailand, with 45,000 employees and six factories.
Partnering with suppliers. In the late 1990s and early 2000s, the strategy evolved from vertically integrating most processes to the market differentiating enablers. The idea was to focus internally on the core technologies, the ones that really drove the business, and partner with suppliers for the other pieces that leverage the supplier's core competency. That allows continued product leadership, but reduces the risk due to market volatility.
Seagate expanded significant resources to train and qualify the supplier base, including support for Six Sigma and Lean education and onsite support. As a result, several small and medium-sized enterprises (and some large) were expanded to support PCBA operations, component hook-up assembly and motor design/manufacturing. These operations are still here today and continue to grow with the industry.
Efficiency through automation. In the early 2000s, Seagate also transitioned its core processes from manual and mechanised to automated. That allowed the company to continuously grow capacity rapidly and improve quality, but reduce the cost and control the factory footprint. This change also started the transition of the workforce from predominantly direct labour to a mix of direct labour and professionals.
Leveraging global talent. Over the last 5 years, Seagate has begun moving finance, IT, engineering and other professional work to Asia. The point isn't to move everything, but rather to transition pieces of the business by leveraging on available local talent and yet ensuring that decision-making aligns directly with the work.
The world is flat … and getting flatter. During its first 30 years, Seagate changed as the world became more integrated, demonstrating the changes often at the leading edge.
Jeffrey D Nygaard is vice president and country manager of Seagate Technology. Follow his articles every fourth Monday of the month.