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Seagate Technology (STX - Analyst Report)-owned EVault Inc. has collaborated with NetApp (NTAP - Snapshot Report) to provide cloud services to NetApp FlexPod Datacenter and FlexPod Express customers. EVault has also been enlisted as NetApp’s partner program.

EVault provides cloud-based data protection, backup and recovery services to enterprises. Leveraging EVault’s technologies, NetApp would provide enhanced storage solutions to its clients. Moreover, customers deploying EVault Storage Cloud for NetApp will be able to save costs.

Incidentally, EVault was acquired by Seagate in 2006 for $185 million to gain traction in the managed services segment. The company currently caters to 43K enterprises with its cloud-based solutions.

We believe that cost benefits of cloud computing are pushing different companies toward massive information technology restructuring and upgrades. This is one of the reasons that enterprises have been investing in the area despite the economic weakness that has led to a slump in overall IT spending.

According to the latest report from Gartner (3Q13 update), worldwide IT spending is expected to increase by a modest 0.8% to reach $3.7 trillion in 2013. Moreover, the study forecasts that global IT spending will increase by 3.6% and reach $4.3 trillion by 2017. Thus, considering the constricted spending environment, the EVault–NetApp collaboration providing cost effective cloud-based solutions is expected to gain enterprise acceptance.

Moreover, Seagate’s constant endeavor to develop new products to cater to its customers and penetrate newer 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 a headwind.

Additionally, weaker PC shipments are also expected to pressurize hard disk drive demand which in turn will affect Seagate’s results.

Currently, Seagate carries a Zacks Rank #3 (Hold).

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