Hi, everyone. Good morning. I think we'll get started, come and take a seat. I'm Mark Newman, Bernstein's U.S. IT hardware analyst, and I'm very happy to introduce the Gianluca Romano, CFO of Seagate. Thanks very much for joining us today.
Thank you, Mark. Before we start, let me remind everyone that I will be making forward-looking statement today, you can learn more about those risk on our website.
Okay, perfect. I want to get started here and just remind everyone, we've got some prepared questions I'm gonna ask, and then I'm gonna open it up to the floor. There is an app you can submit a question, or if you prefer, we have a microphone, and you can ask questions live as well. To start off, let's talk a little bit about the market dynamics in hard disk drives. Recently, one of your competitors, Western Digital, or your, I should say, your main competitor, sorry, Your main competitor, Western Digital, forecasted mid-20s exabyte growth, in nearline, and I just wondered, what's your latest, do what is your latest thoughts on growth? Do you agree with this, or what are, what are your latest thoughts on that?
Yeah, in generally, we agree. We presented to our investor day, May last year, a very similar forecast in term of nearline exabyte CAGR, now mid-20s, is over a period of time of, you know, three, four, even five years. Every year is a bit different. I think we have a similar view of what will be demand and what we can increase in term of exabyte production.
On pricing, hard disk drive pricing, recently, we've seen blended average prices on a per terabyte basis to be stable, flat, to very slightly up. Up something like low single digits year-on-year, something like that seems to be. Just going back to Western Digital because they just had an analyst day. They recently said that they're sold out for 2026, and with some contracts going to the end of 2027, and even one contract going through to the end of 2028, and that they expect prices to remain stable, they call it, which the implication from that was flat to very slightly up. Starting off, do you expect prices to stay stable for the next five years? Do you think prices could go up, or what, how do you see that?
We are not changing our pricing strategy. No, we starting this strategy about almost three years ago at this point, and we are very consistent. Every time we renegotiate a contract, there is a little bit of price increase. It's very important to push customers to adopt the latest product available because this is how we want to increase exabyte. It's not adding unit, but is increasing exabyte from the same number-
... of units that we can produce in our manufacturing. I'll say we could be more aggressive on pricing, for sure, but I think stability and visibility is very important. We are very consistent. Every quarter, we do it to be better.
We don't go for unreasonable price increase. We are very consistent. There is always the input of the mix from, you know, lower capacity drive to higher capacity drive. When you look at the average, it's not really telling you exactly what we do product by product. I tend to agree that, based on the orders that we have for calendar 2026, as we said at our earning release, we expect pricing, average price per terabyte to be flat to slightly up.
Just to clarify, what you do, to the benefit of the audience. I believe what you do is you, for, legacy products or products that are being renewed, that are more than 1 year or 1 year old, you're essentially increasing the price on like-for-like products. All right? What you're saying is you're offsetting that with new products, with a higher density coming in at a higher price per drive, but a lower price per terabyte, and that offsets the price increasing on the like-for-like drive. Is that a correct summary?
I would say the offset is very limited. It's not a full offset, so there is an increase of the average price per terabyte, as you have seen, and you will see, you know, through the rest of the calendar year. Is maybe a little bit of incentive when a customer is adopting a much higher drive in term of capacity.
... because our cost per terabyte is much lower, so our profitability improves a lot.
Right
... despite that very small discount. Now, this is valid only for the first time they buy that product. When they come back and buy again the same product, now price is going up. This is why, you know, to model every quarter is not so easy. There is a lot of mixed input and who is buying this new product for the first time, who is buying for the second time. Some have a discount, some have an increased price, so. When you put all together, we see, you know, stability and some increase in price per terabyte, average price per terabyte.
Given that the market seems to be so strong right now, given that NAND flash prices have been increasing dramatically, probably double or triple in the last quarter or so, is there an opportunity to, I mean, I know you touched on it, but is there a realistic opportunity? For Seagate and potentially your competitors to increase price per terabyte more than the currently quite, you know, compared to NAND and DRAM, your price increases is quite slow. Is there opportunity to increase it more, or is that gonna be more limited because of the longer term contracts that you have?
No, I think, if we wanted to increase pricing more aggressively, we could. Demand is well above supply, so we could. It's just as we want to manage, now, our strategy and hopefully know how the industry is viewing this, is a long-term benefit for the industry to have demand a little bit above supply, and we are reasonable with the price increase, but we are very consistent. It's, it's stable, maybe not super aggressive, but very stable and very consistent, and this is increasing our profitability for almost three years consecutive every quarter. I think, if I have to decide what I want, is a major increase and then possibly a decrease in profitability, or is more stable increase, I always prefer the more stable increase.
Fair enough. Fair enough. drilling down on the point versus NAND though a little bit more. given how steep NAND prices have gone up, that cost differential for your customers is much wider. It used to be six to seven times, I believe, NAND being six to seven times more expensive.
Yeah
... per gigabyte. It's probably 10, 15 times, maybe 20 times, not that far, far away around the corner, given how fast prices are going up. Does that impact your potential demand? I know demand is already tight, but is there some portion of demand that's on the edge between a hard disk drive and NAND that can flip backwards and forwards, and that could potentially you could benefit from?
I would say in general, as you said, demand is above supply, so whatever we produce is going to be sold. This additional potential demand cannot be satisfied anyway because we already sell 100% of our exabyte. In the public cloud infrastructure, I don't see a lot of changes. It's kind of independent. The price of NAND from hard disk is independent. Wherever they go, very high or very low, now, the infrastructure is always being very similar. That is, storage is on hard disk, and then you move the data from a hard disk into an NAND when you need to run the application, and then you send the data back to a hard disk. That infrastructure has never changed for the last, now, 10, 15 years. It's always separating the two components.
I guess their procurement, our customers' procurement, are buying those two components for different needs. The overlap is very, very limited. When you go in other segments, low capacity segments, there is for sure an overlap, and of course, in that case, the delta price can drive some delta volume. Because 80% of our revenue is in data center, I would say it's very limited.
This would be some OEM business, potentially?
Some OEM, some VIA client, so video and image application, but in the client space, consumer for sure, now very sensitive to...
... pricing, but not in the big public cloud, and probably not even too much in the big enterprise OEM.
A few months ago, there was some market chatter about some hyperscalers' hard disk drive demand switching to NAND because they couldn't get enough hard disk drive at that time. Did you see that, or was that false?
As I said before, I think, no, it's just people talking. As I said before, all what we produce is sold, and is sold today for the end of the calendar year. We sell what we produce. You can talk and say whatever you want about the extra demand that we cannot serve. I don't think it's going anywhere because of what I discussed before. The two components are used differently.
I don't exclude that for very, very small volume. You know, you could use some NAND to do storage. It's not a good decision for our customers. By the way, it's not that they are now swimming into NAND either. I don't know how they can do it.
Switching gears to technology and supply side, you said that HAMR should enable roughly high teens areal density per year. This, though, is still a pretty large gap with long-term demand in the mid-twenties. At the moment, your shipments are matching pretty close to where demand is, mid-twenties. How do you reconcile that gap between the high teens areal density improvement and demand and shipments in the mid-twenties?
It's a good question. Well, first of all, I would say it's not that demand is in the mid-20. Demand, the TAM, is what the industry can produce.
Right.
For sure, supply and demand today, if you look what we ship, is equal to supply. It's not equal to demand. Demand is higher. Yeah, we are increasing our exabyte at, you know, like 25% CAGR. That depends from the entire mix. You need to think about not everyone today is on a 30 terabyte drive, and tomorrow moving to a 40 terabyte drive. Now, if theoretically everyone is doing that, in a year, you can increase by 33% your Exabyte CAGR. Really No, we sell drive from 1 terabyte to, very soon, 40 terabyte.
The increase in exabyte, depending from how all this mix is moving up.
... is not just the highest capacity, it's everything up.
There are a lot of enterprise OEM that are buying 18 terabyte, 20 terabyte, 24 terabyte, and every year they move up, but they don't go from 30 to 40. When we look at that mix change, and of course, our product roadmap, and how we think customers will be qualified and what we can ramp of those products, we think about 25% exabyte CAGR is what we can generate for the next, now, 3 to 4 years.
I see. Even though areal density is only in the high teens, you think you can still-
Yes
get some of that mix change?
If you think about, if you have a customer that today is on 20 terabyte and can go quickly to 40 terabyte, can double.
Right, right.
The mix is not very variable. When you put all together, now the 25% CAGR is what we think we can do, is fairly close to what we have done. I think recently we've been between, you know, the 25% and 30%, depending from the quarter. I think that is the range.
You probably get this question, like, every day. I have to ask it, any plans to add unit capacity, any mothballed factories that could be repurposed to boost unit production?
Well, our factories are full at this point. Of course, we always try to optimize the space that we have, but we are full. We have no interest in adding units because we think with our product roadmap, with the same number of units, we can generate that increase in exabyte, that we think will be enough to satisfy the short-term need of our customers. Possibly not giving now them the opportunity to build a lot of inventory or any inventory, but also not so short, whereas they cannot build the next data center because they don't have our disk. Today, I'm not aware of any project on a data center that is put on hold because they will not have our disk.
We are one of the components that can be short, but we are not at the top of the list. Of course, there is a demand that our customers have, and then here's what they can do, now, based on the power they can get and other components. There are some components in memory that looks to be short right now. Of course, GPU was another component, but it's probably still a bit short. There are some of the semiconductor, which seems to be short.
We are now, possibly a little bit high in the list, but we are not the component that is the bottleneck-
Not the main bottleneck.
... in building the next-
Right, now.
... data center. This is exactly what we want. No, we don't want to be a problem for our customers, we don't want to produce more than what is really needed for the short term.
Okay, great. Can you talk about yields in your HAMR products?
Yields, as every, you know, every new product that you have, now, improve with the time. You know, of course, every quarter, we have little bit better yield. We are now at the second generation of HAMR. We have the fourth generation, where is the platform is on a 30 terabyte, and go from 30 to mid-30s. There are different variant of the product, and we are qualifying the second generation, so the second platform, which start at 40 terabyte SMR, and then will grow with the time also into the mid-40s.
The yield will improve, as always been in the past.
At the moment, though, the yield, would you say, is not quite mature as PMR yields?
It's not exactly the same level. Of course, PMR, we have built that product technology for more than 20 years. We are building HAMR. The first qualification was November 2024, so it's not even. It's basically a year and a half. There are opportunities to improve the yield, that means lower cost for us, and of course, this is also what we include in our estimate for the 25% Exabyte CAGR. Some will come also from better yield. The yield is good. It's not bad, it's actually very good.
It's not equal to PMR at this point.
Right. Is there a difference in yield between your first gen, Mozaic 3+ and your second gen Mozaic 4+? Presumably.
Second generation will be better. We are still not really producing that. We are still in the qual phase. We are, now, we are finalizing those quals, and then we ramp. We will see, but I'm sure it will be better.
I guess my other question, though, on yields would be, even though you may have a slightly lower yield for your HAMR products, is it still correct that due to the areal density improvement you have, you still have a lower cost per terabyte?
Absolutely. We show that actually at our investor day. There was a slide with a cost per terabyte of our last product on the prior technology, so on PMR, the fourth generation HAMR, then the following generations of HAMR. You can see the fourth generation of HAMR is fairly similar to the last product on PMR in term of cost per terabyte.
A little bit lower, but fairly similar.
Then you start to see the very good impact in the cost decline from the second generation on. This, this 40 terabyte drive will give us a good opportunity in term of cost reduction.
The big benefit really is four-
Yes.
Mozaic 4.
Start at 4. Was some benefit on the 3 terabyte per disk...
30 terabyte per drive, it will be much better on four. With improvement, it will continue to be a very good driver for our cost decline, and of course, our profitability increase in the next several years.
I think last quarter, I know you don't break it out exactly, but doing the maths you had, HAMR was over 20% of nearline exabyte shipped. Is that... I assume then that's all Mozaic 3+, because Mozaic 4+?
It's all Mozaic 3+. Yes.
Yeah. Not much difference between those products within Mozaic. Do you have any shingled products within?
Of course. Yeah, we sell a good portion of our products are SMR, depending from the customer. If the customer prefer SMR, it's just a firmware change that we do at the end of the production, we sell SMR. If they want CMR, we sell CMR. I would say the big public cloud are moving more and more into SMR, we sell more and more of that version.
is the same product, but when you shingle, you get a little bit more capacity.
Right.
It's good for us, and it's good for them if they can use it. Unfortunately, not everyone can use SMR yet, but that is a trend, and of course, we are in favor of this, of this change in future.
You share that cost benefit from SMR.
No
with the customer, or you take it all?
No, a terabyte is a terabyte.
They basically pay similar for SMR versus CMR?
I would say there are no significant differences, and of course, every customer is different. In general, today, a customer or buy SMR or buy CMR. They don't buy a mix, so you cannot really even compare.
But there's a price for a certain customer based on the terabyte that they want. And then if they want SMR, they get SMR. If they want CMR, they get CMR.
Can you talk about what is your mix now, your SMR versus CMR, and is that, like, continuing to increase going forward?
Continuing to increase. I don't think we have disclosed recently exactly what is the percentage, but I would say, you know, it's continuing to increase. Now, because customers are the same in the industry, you know, I would say our disk suppliers, they should have a similar percentage overall.
Right. Okay. Moving on to more the financial side, given stable to strong pricing and your HAMR ramp, how should we think about your cost per exabyte declines and gross margins going forward?
Well, I would say we have a very good trend in the last, almost 3 years now, 11 quarters of consecutive improvement in pricing, improvement in cost, and therefore in better gross margin. I think we guided another very good improvement in the current quarter. As I said before, we are not changing our strategy, so the pricing strategy is the same, so I expect a similar result in the future or even better, possibly. The move into the mix to higher capacity drives give us the opportunity to continue to reduce the cost. Of course, you need to ramp high volume of that product to get really the impact in the financials.
It takes a little bit of time. It's not in, you know, in the Q4 that you get all the benefit. It takes time, now, times to ramp up, but will be very beneficial.
Oh, could you remind us what is the schedule for the Mozaic 4+ ramp?
We are qualifying 2 customers right now, 2 big cloud customers in U.S. As soon as we qualify, we start shipping a certain volume. Of course, as a beginning is not much because before we qualify, then we ramp. We have a little bit of volume for them available when they qualify, but then we really ramp, I would say, more in the second part of this calendar year.
Got it. Got it. Okay. I guess one of the questions I get a lot from investors is this is around relative profitability between Seagate and your competitor, Western Digital. Despite Seagate having a strong lead in HAMR, Western Digital still has a slightly higher gross margin. Can you talk about why that is? Will that narrow?
I don't know. I don't compare too much in details with my competitor. I would say there are maybe a couple of reason. One is, they don't produce HAMR yet. Of course, as a beginning, when you have two technology in the same factories, you are not fully optimized. For sure, your cost structure in manufacturing is not optimized. No, it will be better for us when we move more and more on HAMR, because at a certain point, our production will be mainly HAMR, so we will not have that little bit of disruption of having the two technology. They, no, they will have to go through that transition at a certain point. Of course, it will be good.
for them also to be fully on HAMR, but there is a little bit of time where you have.
Right
that disruption.
Second, I guess they produce a little bit more exabyte, probably for the same reason, and those exabyte are probably paid very well.
presumably, their SMR shingling may have some impact on that, 'cause I think they have a higher portion of shingling, and their UltraSMR has a bit of a better, a bit of a bigger benefit versus Seagate's shingling.
I don't know. Of course, they don't provide, you know, a lot of details exactly on the individual product. I would say customers are the same. If a customer is buying SMR from one supplier, is probably buying SMR from the other supplier, because that means their data center can handle SMR. I don't think there are huge differences. Of course, everyone is now on technology. Now, if they can produce more terabyte from the same number of units, now, it's because they have now a different technology. We focus on HAMR. We think HAMR is the technology of the future.
Now we took a little bit a different decision. We anticipate HAMR, now they are doing HAMR a little bit later.
I think it's a temporary difference. You know, going on with the times, the two companies probably will have similar technology and similar capacity per drive.
A more bit of a transition in the meantime, though.
Yes.
On capital returns, so your latest guidance, I believe, is greater than 75% of free cash flow return to shareholders, but your free cash flow is growing massively, and in my projections, expected to grow, continue to grow significantly, rapidly shrinking debt. Shouldn't you be considering something closer to 100% of free cash flow return to shareholders?
This is what we have done in the past. We have basically returned the entirety of our free cash flow to shareholders, so I don't exclude we will do the same in the future. We have focused on reducing the debt in the last few quarters. At a certain point, our debt was above $6 billion. With the last transaction that we have done recently on our convertible, we are below $4 billion, and we will reduce that even more in the future. Except for that focus on reducing debt, I would say the other part of the free cash flow will probably go to shareholders.
... through dividend and share buyback.
Okay. I have more questions, but I just want to give the audience an opportunity to jump in. If there are any questions from the audience, please put your hand up or submit it online. I haven't seen any on the portal. No one seems to be using the portal, but feel free to put your hand up. We've got a microphone right here. No hands so far. I'm gonna keep going. Actually, I had a question on TCO. HAMR versus SSD TCO. NAND pricing rising significantly, has this changed the TCO gap between hard disk drives and SSDs? How are you thinking about that going forward for total cost of ownership?
If you look at, you know, history, the NAND price is more volatile than hard disk. Right now is in a period of time where NAND price now is increasing quarter after quarter. Of course, there is an increase in the gap between the two technology. As I said before, this is not really impacting too much our business. 80% of our business is in data center, and in the data center, there is no overlap between NAND and hard disk. Again, demand is very strong, so we sell all what we produce. That is kind of independent from where the NAND price is. In the, in the Edge IoT part, what we call Edge IoT, there is for sure a price sensitivity.
We were discussing before, saying now if you go into the consumer business, for example, the fact that the NAND price is going up is probably giving us the opportunity to do 2 things. One is probably to sell a little bit more volume, second, to have a better price.
it's helping, at least temporarily, it's helping that part of the business, but it's not the majority of...
Of course.
... of our volume, of our revenue, is about 20% of what, of what we sell in a quarter.
For AI demand, are you seeing some shift where some of the customers, hyperscalers and, or near cloud in AI, use hard disk drives, not just for cold storage, but also warm training data as well?
Well, the near cloud, now is a little bit different structure. What I said before in the, you know, public cloud infrastructure, they are a complete data center. They have storage, that is hard disk, and they have where they run the application, and they transfer the data from the storage hard disk into NAND, and they run. The near cloud are basically running the application for the big public cloud.
We have basically the same customer. We provide the storage, they provide an additional compute opportunity. The storage is still in the public cloud. They import the data from our hard disk in a public cloud into their NAND in the near cloud, they run the application, and send it back.
I see. The near cloud...
So-
is not actually purchasing
No
... hard disk drives, they're utilizing.
They utilize their customer-
the large storage network
Yeah
... in the public cloud, which is.
They use.
using hard disk drives
... they use their customer's storage to provide the application for their same customer. When they run the application for a certain customer, they take that storage, they import, they run the application, and send it back. When it's a different customer, it's the same. Take the data from the other customer, run the application, and send it back.
In the future, if they evolve in a complete data center, so that means they just don't run the application for the same customers, but they have different customers, and they want to be independent, they also need to have their storage.
Right.
At that point, they will buy our disk.
Right. Got it. During a recent Q2 earnings, you talked about nearline capacity fully allocated through calendar 2026, I believe. Just in a world with booming AI demand that requires persistent access to just massive data sets, are you seeing hyperscalers trying to lock in supply for longer term, 2027, 2028? I mean, one of your competitors did talk about that, but Seagate has not yet talked about that. Just curious if you're seeing that as well.
Yeah, no, I think, I think we talk about that also. Is, I think eye level is very similar, but maybe there is a small difference on how we agree on when we agree on pricing. In term of volume, it's very similar. We discuss with customer the entire calendar 2026, calendar 2027, in certain case, even longer.
I see.
The volume agreement are already there.
What we have done maybe differently, I don't know, possibly different, is when we discuss price. We discuss, we fully discuss pricing for the entire calendar 2026. When we start a product in our manufacturing, it takes about three quarters to come out, and we want to be sure that there is an order attached to that product, and that order has to have know the customer, the time of the delivery, and the price. When you go longer, we think it's probably good for us to wait a little bit before we define the price.
As you discussed before, there is this demand that is very strong, and now a slight imbalance between supply and demand. That is, of course, helping our strategy on pricing and continue our pricing strategy as we have done for many quarters. We prefer to wait a little bit longer. I would say right now we are discussing pricing for the first part of calendar 2027. We always have those-
The first part of 2020-
Yeah
... calendar 2027.
We always have those 4, 5 quarters where everything is fully defined. Everything. Going longer, we basically only define volume, and then we define those exact mix of the product based on what they are qualified, and the exact pricing, now, at a different time. For what we are discussing in the first part of 2027, pricing is following exactly what has been in the past.
No, no changes there.
Have you seen signs, that AI demand is expanding beyond, you know, you talked about hyperscalers, towards enterprise and sovereign? Have you started to see that yet?
Possibly. I would say it's probably still at the beginning. I would say in AI, the major recent change that we have seen is a faster adoption of video AI in China and in U.S. There are a lot of, you know, China new video AI application like we have in U.S. That is what is boosting a little bit more demand, a little bit faster than what we were expecting, so it's creating a little bit of a bigger gap between supply and demand in the short term. Again, it's not that we were not expecting video AI to be a big driver of the demand.
... it's just happening a little bit faster than, or, and earlier than what we were expecting.
That, I think, is where the exabyte of the big volume is, currently is.
You also identified agentic AI as a driver for persistent historical data storage. As AI agents evolve from simple training to independent decision-making, they require constant context from vector databases stored on hard drives. Does this transition move nearline drives into higher replacement cycle environment, given the faster cycles that you may be used on that type of use case?
Interesting.
Does that impact durability?
I would say generally, you know, when you look at AI, there are different phases. There is a training phase, and then there is no inference. There are different phases, and data is used differently. In training, you need a lot of data, so that... impact retention. If you are training for AI, you don't delete any data. You actually want all the data possible to do a better training. You use that trained AI to generate the data that is valuable to you.
It can be for, you know, you in manufacturing, for you know, in your personal life or in whatever application you are using. At that point, AI starts to generate data, and I think we are already in the second phase. Before we were saying, well, to us, in term of storage, the major impact from this new AI is retention. Companies are not deleting data anymore, and cloud are keeping more data. We see data generated from AI coming back into storage, and video is huge-.
'cause video consume a lot of terabyte.
Mm-hmm.
The more companies are keeping video for surveillance or for quality manufacturing or people to generate video for their use, this is a lot of exabyte that are consumed every quarter.
There are different application, different cases. Now, it's not only AI. You know, right now, AI is a big change compared to, you know, the traditional application, every year you will see, you know, new things. Even application that already exist, like autonomous driving. Now, are many years that we are talking about autonomous driving, you didn't see a lot of cars going around without a driver yet.
Now, it's happening. Now, you go San Francisco-
... you go Phoenix, you go other city, you have more and more of those autonomous driving. This is generating a lot of data, and that data gets stored. There are a lot of applications on top of AI that will generate more and more data.
Robotics will be the next one.
Right.
Robotics need a lot of data, and you need to keep that data. It's also part of the training of the robotics, so it's somehow linked to AI.
... but it's not the pure AI. All those new application are all based on data and in how they use the data to improve and to generate something more valuable in the future.
Mm-hmm. I want to give the audience a chance to ask a question again. Any questions? I could keep going, but I want to give you a chance. No questions. It's all clear.
Yes, they are really shy.
Is that a question there? No. No question. Actually, another question about. We don't have that much long left, but I'm gonna squeeze in one or two more. Your competitor, I'm sorry to ask about your competitor, but they just had an analyst day, so that's why I refer to them. They recently talked about hyperscale customers being technology agnostic, and don't care whether they're shipping HAMR or PMR, they just want exabytes, they want terabytes. Do you agree with that?
I tend to agree. I know I'm sure a customer need a certain number of exabyte, and they don't care what is the technology inside the box. They care about how big is the drive, because this is their TCO. Now, especially in this period of time, where pricing are not going down, they are going up, your TCO comes from the size of the drive. Now, if you can put a 40-terabyte drive into a current data center, where before you had a 20-terabyte drive for the same cost of that location, you double the storage. They sell storage. Our customers are selling terabyte to all of us and to our companies. For the same cost, with a bigger drive, you can strongly increase your revenue and your profitability. That's why they care about the size of the drive.
Said that, if you produce hard disk, you want to produce with bigger size, with a better cost. The number of disk and number of heads are important to the cost. If you can produce the same capacity with a lower bill of materials, now you come out with a better cost reduction. I would say a customer doesn't care if a, if a hard disk is a PMR or an HAMR, and if it has 12 disk or 10. They don't. We care because it's a cost opportunity, and also because inside the box, there is a limited space.
You can add disk until a certain limit, and then there is no space anymore. HAMR is the future-
... because we'll continue to increase the capacity per disk, so what we call areal density, so you can store more and more data in one disk. You avoid that problem of the physical space, and you continue to produce bigger and bigger hard disk drives. I would say from a customer perspective, I don't think it's a big difference.
They care about exabytes-
Yes
... and how much they're paying per exabyte, and reliability and performance.
They care about exabyte in total. They care about terabyte per unit. They want one hard disk.
Right
at 40 TB, not 2 at 20-
Right
because of what I told you before.
Power.
From the same location.
Now they get more storage.
Mm-hmm. Mm-hmm. Just finally, just wrapping up for me, and just looking around to see if there's any questions. Please put your hand up, any questions. Otherwise, we're gonna be wrapping up in a minute. What do you think is most misunderstood on the street? I mean, obviously, Seagate stock has been pretty strong. Do you think there's anything that's misunderstood, or is anything you wanna point out that you think Wall Street analysts like myself or buy side are not getting quite right or missing?
I would say in general, I think the story is fairly well understood. The application that are running and driving the need for more storage are very well known, and it's fairly clear where demand is stronger than supply. I think, you know, I think it's important to understand that this industry is generating an increase in exabyte year after year after year. There is a huge increase in exabyte that maybe will not fully answer to the demand, but it is a huge increase, and is a strong industry, is a very consolidated industry. I think now there are differences between the industry today and the industry, you know, years ago.
I think the business is very strong, and the cyclicality, if any, will be very different in future compared to what has been seen in the past. I think now from time to time, I still hear about the NAND versus HDD now. That is the part that I don't understand. I don't understand how after 15 years of a cloud infrastructure being exactly the same way, people can still think that that will change somehow. By the way, as I always say, it's not that, there is a lot of NAND available. That is maybe some... I don't want to say doubt, but some possible small misunderstanding, but-
Too much focus on that.
Yeah.
And-
overall, I would say the story is strong, and I think it's recognized from the analyst and our investors.
Okay. Well, great. Thank you very much-
Thank you very much.
... Gianluca, for joining us today, and thanks for everyone for joining today.
Thank you.