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At CEATEC 2013 in Tokyo, storage solutions provider, Seagate Technology (STX - Analyst Report), will unveil its latest heat assisted magnetic recording (HAMR) technology used on hard disk drives (HDDs).

The HAMR technology uses heat to increase the storage density of disk drives. The surface of the HDD is heated by a laser before writing the data which enables the storage of more data bits into a smaller area and subsequent cooling stabilizes the written data. The technology is targeted at enterprise class storage, especially blade servers.

Leveraging the HAMR technology, Seagate expects to increase the storage density of a hard drive to 20 Terabyte (TB) by 2020. The technology also bodes well for Seagate as businesses generate a large amount of data that needs to be stored cost-effectively for future reference. The company expects to cater to these needs with hard drives at lower cost per gigabyte.

Moreover, the simple equation of more data being stored on a fewer number of drives will automatically bring down storage costs as well as the resultant heat and power consumption. The company expects to start selling HAMR drives in 2016.

Seagate’s development of new products to cater to its customers and penetrate new markets with customized products should yield positive results in the long term. Seagate also has significant exposure to high-end corporate desktop and enterprise server markets, where its new products are likely to gain traction.

Moreover, the company’s expansion in the solid state drive market is expected to boost its client base, going forward. However, competition from Western Digital (WDC - Analyst Report), Micron (MU - Analyst Report) and Fusion-io remains the headwind.

Moreover, weaker PC shipments are also expected to pressurize HDD demand which in turn will affect Seagate’s results.

Currently, Seagate carries a Zacks Rank #4 (Sell).

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