Businessmodel of Seagate Technology

Customer Segments

Seagate has a segmented business model, with customers who have slightly different business needs. It markets its offerings to two groups: Consumers and Enterprises.

Value Proposition

Seagate offers two primary value propositions: cost reduction and brand/status.

The company’s lean operations have enabled it to offer less pricey products than those of its competitors. It seeks out the least expensive components from its suppliers. It also was one of the earliest companies to utilize Southeast Asian manufacturers, a tactic that enabled Japanese firms to take over the floppy disk drive category. This strategy helped Seagate beat the prices of Hitachi, Toshiba, NEC, Fujitsu, and others, facilitating its dominance of the hard-disk drive sector.

The company has built up a formidable brand as a result of its strong performance. It has achieved numerous industry “firsts”. These include introducing the first 5.25-inch hard-disk drive; being the first corporation to ship one billion HDDs; introducing the first hard disk with a spindle speed of 10,000 RPM (the Cheetah 4LP); and producing over one billion magnetic recording heads. It has also received recognition on prominent lists – for example, in 2006 Forbes named it “Company of the Year” for being the best-managed firm in the U.S.

Channels

Seagate’s main channel is retail stores, through which it acquires customers. Specific stores where its products are sold include Best Buy, Office Depot, Staples, Costco, and Sam’s Club. The company also sells its products through its website and the sites of online retailers such as Amazon, Dell, and TigerDirect.com.

Customer Relationships

Seagate’s customer relationship is primarily of a self-service nature. Customers utilize its products while having limited interaction with employees. The company’s website includes a wide variety of resources for self-help purposes, including articles, product documentation, videos, and answers to common questions. That said, there is a community component in the form of a forum where advice can be received from peers.

Key Activities

Seagate’s business model entails designing and developing its products. It utilizes third-party contractors in Asia for manufacturing purposes.

Key Partners

Seagate maintains the Seagate Partner Program, through which it works with resellers, system builders, and system integrators. These entities receive training, marketing support, lead generation, and rewards. Specific program categories are as follows:

Cloud Alliance Partners – Seagate works with members to develop and produce scalable storage and server solutions for the cloud. Specific partners include AIC, CloudByte, Digital Sense, and Scality.

Kinetic Partners – Seagate works with leaders in the open storage software and hardware communities to produce and deliver Kinetic infrastructure with Kinetic HDDs. Specific partners include CloudFounder, SwiftStack, Newisys, Hyve Solutions, Rausch, and Supermicro.

Reference Architecture Partners – Seagate enables members to choose products from select software providers for scale-out storage purposes.

Key Resources

Seagate’s main resource is its product development team, which works continuously to bring new offerings to market in high volume. The company also places a high priority on its intellectual property. As of July 2015 it had 5,194 U.S. patents and 1,207 patents issued and 1,351 U.S. patents and 1,296 foreign patents pending.

Cost Structure

Seagate has a cost-driven structure, aiming to minimize expenses through significant self-service and low-price value propositions. Its biggest cost driver is product development, a fixed cost. Other major drivers are in the areas of marketing and administration, also fixed costs.

Revenue Streams

Seagate has two revenue streams:

Products – The company generates revenues from sales of its disk drive products.

Services -  The company generates revenues from sales of the services it offers to support its products; these include data storage services such as online backup, data protection, and data recovery.