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IBM

IBM Spins Down 221

beggs writes "IBM and Hitachi have signed an agreement which will take IBM out of the hard drive market in three years. This press release on IBM's web site gives some details of the deal. 18,000 IBM employees and all their hard drive related patents will join about 6,000 Hitachi employees to form a new company that will be a subsidiary of Hitachi. Sad to see big blue out of the hard drive business, they have made a lot of contributions to computing." We did a story when they announced their plans back in April.
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IBM Spins Down

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  • $2.5 billion to get out of the hard drive market sounds like a good business deal for IBM to me.
  • What will stop Hitachi from firing everyone after three years and moving production to cheaper Asia?

    I am still not sure whether globalization is a good thing or not.
    • What will stop Hitachi from firing everyone after three years and moving production to cheaper Asia?

      Nothing. But that's not a bad thing. All that will happen is 24,000 or so people will be freed up to do something else in our economy. A company like this sounds like it belongs in Asia anyway - America isn't known for cheap duplication of already wide-spread technology. We're more well known for our R&D efforts contributing to the latest in technology. So, I wouldn't worry too much about it - with the speed that our economy is changing, we won't even notice the flux of 24,000 jobs.
      • All that will happen is 24,000 or so people will be freed up to do something else in our economy.

        Yup, like suck up unemployment and Social Security money. It's not exactly all that easy to find a tech job once you're over 40.

        • It's not exactly all that easy to find a tech job once you're over 40.

          Only if you're still developing like you did in your 20s. Times change, if you don't keep up, you get unemployed, no matter how old you are.

      • We're [America] more well known for our R&D efforts contributing to the latest in technology.

        Well I agree with the first part saying Asian is better suited for cheap manufacturing, BUT America is not so hot in the R&D department. Sure we might have some stuff, but I think Europe and Asia are beating America in this too!
      • Welcome to Wal-Mart.

        While maybe 24,000 jobs won't be missed (unless one of them is putting food on your table and a roof over your head), but this is only a drop in a river of jobs moving offshore.

        I suggest you check out yesterday's WSJ Boomtown column for a little enlightenment, like the paragrapgh that reads:

        "Career advice for the 21st century: Stay away from any job that can be done online, or you'll be competing with my buddy Odyssey -- and people eager to underbid him, too. I found a good programmer in five minutes. I'm still looking for a good carpenter."

        Want to trade in your mouse for a hammer? Unless you can somehow compete with equally competent coders who charge 1/10th what you do, you're going to be in the same (sinking) boat as the rest of us.

        Globalization is rather painful.
      • http://riceornot.ricecop.com/?state=top10r

        What will stop Hitachi from firing everyone after three years and moving production to cheaper Asia?

        Nothing. But that's not a bad thing. All that will happen is 24,000 or so people will be freed up to do something else in our economy. A company like this sounds like it belongs in Asia anyway - America isn't known for cheap duplication of already wide-spread technology. We're more well known for our R&D efforts contributing to the latest in technology. So, I wouldn't worry too much about it - with the speed that our economy is changing, we won't even notice the flux of 24,000 jobs.


        And what's more, that will probably mean cheaper hard drives if the manufacturing costs come down. I say go for it. I'm sure IBM will be able to find good use for the money.

        -- james
        • I do not know wtf that URL is doing at the top of my post. It was certainly not intended to be there.

          I think I hit paste without meaning to. That "if it's not right, you should have previewed it" came back to bite me on the ass I guess :)

          so, apologies

          -- james
      • Dammit! (Score:2, Interesting)

        by GungaDan ( 195739 )
        "All that will happen is 24,000 or so people will be freed up to do something else in our economy."

        -5 ignorant.

        "with the speed that our economy is changing, we won't even notice the flux of 24,000 jobs"

        24000 people would beg to differ, I'm sure

        "We're more well known for our R&D efforts contributing to the latest in technology."

        "We're" best known for our tremendous wealth gap, and our lovable platitude-spouting morons who insist that 24000 people losing their jobs is a good thing, and that those who lose their jobs will "get over it" and "move on" to something better.

        Your ignorant, ignominious, Limbaugh-looney bleatings betray the fact that your concept of "human capital" lacks any trace of humanity. Nice flamebait, though.

      • All that will happen is 24,000 or so people will be freed up to do something else in our economy.

        Yeah like flipping burgers :)
    • What will stop Hitachi from firing everyone after three years and moving production to cheaper Asia?
      Hm. The sticker on my IBM drive (DGHS) says 'Manufactured in Singapore'.
  • Maybe IBM finally brought some of this vapor-ware storage technology to production and they are just selling their drive business for what it is worth today rather than let it die when the new technology is introduced. IBM has always been at the bleeding edge of research so maybe they have something up their sleeve?
  • How long do you people think it will be before harddrives are replaced by newwer forms of datastorage?
  • As long as Hitachi still puts cash into R&D then we should still see cool technology come out of this new company.

    It will still have all same IBM employees -- the same people who came up with the cool technology in the first place.

  • There is a certain irony in the way in which the huge boom - founded on the idea that computing was to become so cheap to use that it would transform all aspects of the economy - should result in the bust that will reduce competition and so make computing more expensive.

    We all know the dangers of monopolies and how innovators can rapidly turn into blocks on progress, so we'll have to watch with care.
  • by webslacker ( 15723 ) on Tuesday June 04, 2002 @07:15AM (#3637324)
    The IBM Death Star has been defeated! The rebellion has won! :D
  • IBM does not want to compete on hardware. It wants to become a services company. Getting rid of hardware is a good step on the way to becoming really profitable again.
  • well, i am not sure about this, but i believe Sun's 2 major hdd suppliers were Seagate and IBM .. they had 2 suppliers since at a certain time, Seagate alone could not provide them with the requested amounts ..

    well now, since IBM's are owned by Hitachi, Sun does no longer have to buy their disks from a competitor.. they buy them from from a partner !

    good news indeed ...
  • by Anonymous Coward
    IBM had some of the best drives not too long ago. So, even with their recent problems it seems like they were not giving it their all, since now they are so quick to 'give up.' Perhaps the problems they had earlier were merely indications (symptoms) of a larger problem.

    I think that the new spin off will do good however. I am curious though... and this is because I see this with my own eyes and hear through friends (it happens all the time and is increasing). When IBM started to shut down, did they let people go that were good quality workers that now must in essence reapply to the new spin off? Where there a bunch of decision makers that caused the problems (or just made them worse) that never found their job in danger? In other words, did the cancer just get moved into a new body? I sincerely hope not, for the workers and of course for myself as I would like inexpensive quality drives.

    • The 60GXP and 120GXP drives are excellent. Most of the problems that people had were from the 75GXP (older than the 60GXP) drives. Even then, the rumors of problems with 75GXPs were a little over-inflated. I don't believe that there were any problems that were more significant than anyone elses. In my opinion, there were just too many l337 h4X0r5 that were accidently killing their drives and bitching about factory defects.
  • by Diabolical ( 2110 ) on Tuesday June 04, 2002 @07:20AM (#3637348) Homepage
    The harddrive market is not really a lucrative bussness anymore. The costs of developping harddrives with larger capacity is almost outgrowing the earnings of selling drives.

    IBM has a good reasearch facility which have come up with new methods for storing data. Probably they want to raise money for the production of some of those methods. It's not that that division was skyrocketing their sales revenue anyway...

  • This event reminds me of a time when the IBM AT was the hot sh*t and IBM was going around touting their wares.

    At a demo, the IBM sales rep asked for questions. My friend said "How fast is your drive?" This was at a time when 60ms access time was SOTA. The IBM rep said "80ms..." My friend retorts "But the current tech is 60ms" to which the IBM rep said "See? IBM's is faster".

    Doh.

    Glad to see IBM's HDD go...
  • by cr@ckwhore ( 165454 ) on Tuesday June 04, 2002 @07:22AM (#3637353) Homepage
    don't forget to park the heads before shutting off the lights.
  • 75gxp (Score:4, Funny)

    by nikitin2k ( 525326 ) <thomas@imperietFREEBSD.org minus bsd> on Tuesday June 04, 2002 @07:24AM (#3637359) Homepage
    Sad to see big blue out of the hard drive business, they have made a lot of contributions to computing. Yeah, it's really sad. I'll espacially miss the 75gxp series.
    • Sad to see big blue out of the hard drive business, they have made a lot of contributions to computing.

      Yeah, it's really sad. I'll espacially miss the 75gxp series.

      Mine's still hauling the mail after about a year and a half, with no hint of possible trouble. (Then again, I don't overclock and I don't buy sh*tty components (cheap power supplies and such).)

      • Mine's still hauling the mail after about a year and a half, with no hint of possible trouble. (Then again, I don't overclock and I don't buy sh*tty components (cheap power supplies and such).)

        Your anectdote means nothing. Your drive runs OK; all of mine (three) went bad almost out of the box. And no, I don't buy shitty compenents - my job depends on my machines staying up, so I don't fool around.

        Every time someone mentions the 75GXP, someone else jumps in with their anecdote about how the drive works for them. Anecdotes don't make an argument. The 75GXPs (or at the 75GXPs produced in the Hungary fab) were defective drives, especially considering the high quality of IBM's previous drives.

        I don't particularly like how IBM handled the affair. They should have admitted that they shipped bad drives and issued a recall. I'm not buying any more IBM drives, not because one line of their drives went bad (all other IBM drives I've had have been good), but because I'm not happy with the treatment I received. I RMAed all the bad drives I had, but I should have never have received these drives to begin with.

  • R&D (Score:2, Interesting)

    by Cirvam ( 216911 )
    So does this mean that IBM will also stop doing R&D for new drives and storage techniques such as the stuff they are doing at Almaden [ibm.com]?
    • Some select bits aren't being sold off so I suspect that anything very cool will be kept. Except of course the mass of IP which will be going will impact any current research they're doing.

      Personally I'm interested in what'll happen at Hursley [ibm.com] in the UK (used to work there) where IBM SSG [ibm.com] have a big department - hopefully it'll continue. Hursley has the world's first harddrive in its "museum"
    • IBM still does a lot of semiconductor fabrication research and licenses the patents out. I would guess this will happen to hard drive technology.

      Making chips and hard drives is basically a commodity business. The real money is in developing new methods, products, etc. that can be licensed. IBM is very good at this.
  • by jptxs ( 95600 )
    EMC is in fierce competition with Hitachi in the enterprise market. EMC used to buy it's drives, the base units anyway, from IBM. Wonder how EMC will do having to buy its drives from its biggest competitor?
  • Most likely IBM has already technology that will obsolete hard disks. What would be a better way to get rid of expensive manufactory lines than selling them before they get obsolete?
  • Not sad...but good (Score:5, Insightful)

    by Tazzy531 ( 456079 ) on Tuesday June 04, 2002 @07:43AM (#3637417) Homepage
    IBM has always been tops on the Research and Development in the field of Computer Science. It is not too bad that they are leaving the hard drive market, but actually good that they are doing this. The Hard drives have turned into a commodity. People are making them cheaper and cheaper. At some point, there will so cheap that 1) there will be very little profit margin 2) only a handful of companies will be able to profit.

    I'd rather see IBM dump this branch and be able to earn royalty or have stock ownership in this new company than bog down their budget with this sector. By dumping this sector, they can now effectively use their R&D to develop something new. Maybe a new hdd technology, that they will license to the new company.

    • It is not too bad that they are leaving the hard drive market, but actually good that they are doing this. The Hard drives have turned into a commodity. People are making them cheaper and cheaper. At some point, there will so cheap that 1) there will be very little profit margin 2) only a handful of companies will be able to profit.

      So, in order to protect the busines model of companies that don't (can't) adopt to new markets, the consumers should suffer, hmmmm, where have I heard this before...

      Likewise, it would be a nice thing if the top 100 open source gurus would die today ?
      Jeezz, what are you smoking man ?

      • IBM is and has been a R&D company. They do better at the forefront of technology then maintaining/selling current technology. I mean look at it this way. The first person that made a rotary telephone made a lot of money. But after a while, there is no profit in it anymore. Those companies either moved to pulse telephones or died trying to compete. I'd rather see IBM spend their resources on developing holographic storage devices then spend their resources on building IDE hdds.
    • This will get me marked permanently as a troll, but I think Microsoft passed IBM a few years ago in terms of R&D expenditures.

      In terms of giving up on hard drives, IBM may also be looking at other technologies to replace it. I suspect this is a good short-term move for them (but not the IBM ex-employees) since its a commodity item that other companies are paying the research bill for.
    • Two details:

      Certain IBM HDD operations are not included in the deal.

      18,000 IBM employees and all their hard drive related patents will join about 6,000 Hitachi employees to form a new company that will be a subsidiary of Hitachi.

      This probably means that some of IBM's quality minds who develop these drives will be going too, though I do agree that I'd rather have IBM doing more development than manufacturing. They've always been strong at new technologies development.
    • I fail to see how this really affects anything at all, in any meaningful manner. The people who researched storage for IBM will still be conducting research. The people who turned that research into affordable, kickass drives will still be turning research into affordable, asskicking products.

      The only thing that's happened here is a lot of people will be getting their paychecks from a different bank, and will no longer be required to wear a tie to work every day.

      The hard drive market is not one so small or static that the loss of one manufacturer will affect the market in a negative way. This is merely a business decision, where IBM feels it can pursue its business goals most effectively by having the division exist as a seperate entity.

      I wish all the employees good luck during the inevitable mass firings that will occur during the restructuring (they're not layoffs when you have no plans to recall the affected employees), and good luck inventing, and productizing the next big thing in storage technology. Here's a goal for you: a storage system for an HDTiVo.

    • By dumping this sector, they can now effectively use their R&D to develop something new.
      This speaks of a misunderstanding of how R&D shops are organized, especially within IBM. The research arm and the developement arm are seperate; one develops cool new whiz bang tech, the other takes that tech and turns it into products. It is this second that has been split out. To imply that the presence of the seperate group developing products somehow limits the group doing research is kind of silly, it's the profits from the sales of the products developed by these folks that pay for the research into the next big thing.

      This does present some thorny problems for the portions of IBM that depended upon this group that is leaving, though I suspect it was the ironing out of those problems that took so long to form this agreement. Where will the Shark product be without a ready supply of drives? Or most of the eServers for that matter?
  • by skinfitz ( 564041 ) on Tuesday June 04, 2002 @07:47AM (#3637435) Journal
    "Sad to see big blue out of the hard drive business..."

    IBM drives used to be good. They were expensive, but they were good. You knew that if you sprung the extra cash for an IBM drive you were paying for reliability.

    Exactly when this changed I don't know, but what I do know is when I hear of people who have had a large capacity drive die suddenly overnight, my first reply is 'is it an IBM?' - literally every case within the last year has been 'yes - how did you know?'

    I (and many others) are presently involved with a class action lawsuit [theregister.co.uk] against IBM for claiming that their drives are reliable when they are not. I unfortunately bought an IBM Deskstar 75GXP drive when looking for a solid reliable drive however this turned out to be a big mistake. It was the first IBM drive to use a glass platter to reduce costs etc. but unfortunately it simply made the thing extremely unreliable. My own tests have shown that the thing is VERY susceptible to overheating, and the only way I could get it to retain any data was to keep it as cool as I can (at this point using seperate screw on dual fan HDD cooler and extra case ventilation with nothing near the drive).

    Bye IBM - you wont be missed (like my 50Gb of data was).
    • Apparently IBM San Jose was told time and again to reduce their costs but never did, so they lost the HD bid to IBM Japan. Japan developed the Deskstar series "cheaper and faster". And down comes IBM's HD division.


      oops...sorry about that

    • I have 3 excellent 40GB 60GXP drives, and plan to buy a 4th.

      Perhaps you were just unlucky. Then again, mechanical devices do wear out over time.
      • Do you wish to buy a 75Gig 75GXP?

        I got one returned from the factory (replacement for a dead one) and I haven't bothered opening the anti-static wrap yet because I went and bought a Maxtor during the month it took IBM to get around to sending me a HD.

        It should be as good as any other they make, because it has no wear at all, since factory testing.

        If you really think they're good, buy it for a fair market price.

        Reply to this message, or to my email address, and we'll discuss price.
  • They give financial bonuses to anyone in the company who files a patent... they run a great public, free patent search database... and they defend and license them with vigor. I am curious whether they will still do hard disk drive R&D, or just mass storage R&D. Given all that IBM has cooking in its labs, it could be that they want out of hard drives because "the end is nigh" for that mode of storage. I'd look at storage innovations and patents filed by IBM in the last 5 years or so to see whether this is actually the case...
  • Sold like Slaves (Score:1, Interesting)

    by StringBlade ( 557322 )
    My father worked in the hard drive division of IBM and is one of the thousands of faithful employees (nearly 25 years) who will be sold like slaves to the new subsidiary company. According to him, IBM has told its hard drive employees they will not be allowed to move out of that division into anywhere else within IBM until at least one year after the completed sale. Their only way out is to quit (hence no benefits).

    Thanks Big Blue!

    Brought to you by the we-didn't-like-benefits-anyway-department

    • Quit fucking whining. Most companies would have just canned all of their people in a situation like this. You father is goddamned lucky to have a job.
    • by Anonymous Coward
      According to him, IBM has told its hard drive employees they will not be allowed to move out of that division into anywhere else within IBM until at least one year after the completed sale.

      To me, that sounds like something Hitachi might have required, to make sure they're actually getting the teams that are part of the deal.
  • What does this mean for their newer micro drives they have been developing? I was really looking forward to seeing these in my Gamecube, but Nintendo isn't know for making new agreements with new companies all to fast. Will they have to make an agreement with Hitachi to use them?
  • ....I have had three IBM drives go belly up on me.

    Three! The only other drive to go bad (on me) was a Western Digital... and I think that was a fluke.

  • IBM is just redifining itself.

    They sold the comunications side of the business to Cisco a couple of years ago.

    They sell the HDD to Hitachi.

    Looks like they want to focus on services and Big Iron. Stuff they do very well.

  • I suppose this shouldn't be a huge surprise. Being an ex-IBMer, I can empathsize with the employees in the HDD division, I'm sure from their point of view, it sucks rocks. I used to be in the service division, back when they cut service off like a gangreen limb and started calling us Technology Service Solutions (TSS) as part of a Joint Venture with Kodak.

    I suppose the point of my story is that even several years ago, IBM has been looking for the places it can cut the fat, increase the profits. It's what all business folk do. And IBM has done their share of silly business moves that looked like good ideas, (*cough* TSS *cough*). And if it's doesn't work out, those who endure, will get folded back in and things could very well be better than before.

    IBM does alot of drive business. How many times have you opened up your Apple G3 or G4, only to find the IBM HDD inside? Or how about your laptop? How many folks have upgraded their laptop HDD's with IBM drives? If IBM is getting out of the HDD business, there must be something in R&D that's pretty darn cool, or IBM's losing their competative edge.
  • I hope this means that the millions of dollars IBM has poured into advancing the state-of-the-art in magnetic storage will now be diverted into optical, hologram, and other storage innovations. While hard drives may be a commodity, IBM is one of the few companies who can actually lay claim to inventions that made possible the 160+ gig hard drives of today.
  • does anyone think like me that a new technology is coming?
    ibm sells their hdd business, but according to their [yahoo.com]
    past they really have enough money to keep trying...
    is there something that is much better than any hdd, so that ibm doesn't need hdd business anymore...
    do you think so?
  • Basically, what IBM is saying is that the market for storage based on mechanical devices will be gone in the not so distant future. Expect IBM to be a major player in one if not all of these disruptive technologies:

    1. Solid State non-volatile memory
    2. Bio-electro non-volatile memory
    3. Nano-MEMs based non-volatile memory

    All this is good, and just a sign that the guys up top at Big Blue know when to get out of what should have been the first thing to be replaced in PC's.......a moving mechanism and primary point of failure in computers.
  • I'm suprised that nobody saw this coming sooner. On a recent shipment of IBM PCs (before the announcement), I noticed that all of their hard drives were made by Maxtor.

    I certainly hope that this closure does not effect IBM's R&D on some of their next-gen storage devices (extremely-high-density hard disks, holographic storage, microdrive, etc). Those devices showed promise, and IBM is probably the only company capable of continuing such efforts (Their efforts could have equaled those of PARC)

    So long, and thanks for the disk!
  • I am serious. The last 3 IBM HD's that found thier way to me died within weeks. I dont know what they changed.. but.

    Long live Fujitsu drives.. my favorite!
  • Does no one but me see the real import of this move by IBM. 1) Why would they sell off patents worth millions? 2) What do they have in the pipe that would replace hard drives?

    1) Smart technology companies dump technology that is on the way out. IBM is saying here that hard drives are on there way out and will be dissappearing in three years.

    2) Solid state storage. In a few years we'll all be using 'flash crystals' or some other 50Gig per portable ounce technology. Hard drives are headed the way of bubble memory, and good riddance. They have been the bottleneck of systems for way to long now.

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