Seagate chief backs flash memory

Bill Watkins, CEO of California disk-drive king Seagate Technology, visited the Twin Cities on Friday with a reassuring message for Seagate's 3,300 employees in Shakopee and Bloomington.

He told them that flash memory -- computer chips without moving parts -- won't replace his firm's disk drives around the world.

"Hard drives are not going away," Watkins said in an interview. "Flash memory is an opportunity, not a threat."

Watkins confirmed news reports that Seagate will dip its toe into the flash-memory market later this year, and he expects that some of the design work would be done in the Twin Cities, where Seagate is one of the biggest technology employers.

During the next two to three years, Watkins said he expects employment here will increase 200 to 300 from the current 3,300 -- not just as a result of flash memory development but across all product development done here.

Watkins has reasons to be confident. Worldwide demand for disk drives is growing 12 percent annually. Seagate's revenue is growing at about 10 percent a quarter, a trend Watkins predicts will continue for several years.

Nonetheless, the growing popularity of flash hasn't escaped Seagate's attention. Flash memory is used in iPod music players, digital cameras, multimedia cell phones and, now, new personal computers from Apple and Hewlett-Packard.

Watkins points to the higher cost of flash memory as one reason he's not worried. Apple's MacBook Air computer, which comes with or without flash memory, costs $1,800 with an 80-gigabyte hard drive but $3,100 with a 64-gigabyte flash memory.

The difference reflects the higher price of producing flash memory. At today's prices, a gigabyte of hard drive storage for a personal computer costs about 45 cents, while a gigabyte of flash memory costs about $7, said Jeff Janukowicv, an analyst at research firm IDC in Framingham, Mass.

Watkins asserts that today, flash memory is only practical in small consumer products and in a tiny slice of the overall business market.

"Flash memory for notebook computers doesn't make sense, because it's expensive," Watkins said. "However, in three or four years, things may change."

Seagate currently has 1,200 employees in its Shakopee enterprise engineering design center, which develops disk drives for the business market. It has 2,100 employees in Bloomington who design read-write heads, the chips that record or retrieve information from a spinning magnetic disk, and do limited manufacturing of those products.

Steve Alexander • 612-673-4553