© 2013 HGST, INC.

Steve CampbellChief Technology Officer

Navigating Storage in a Cloudy Environment

2© 2013 HGST, INC.

Forward Looking Statement

This presentation contains forward-looking statements that involve risks and uncertainties, including, but not limited to, the development and adoption of a new storage architecture and the potential introduction of products based on this architecture. Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved, if at all. Forward-looking statements are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements.

 

Additional key risks and uncertainties include the impact of continued uncertainty and volatility in global economic conditions; actions by competitors, business conditions and growth in the various hard drive segments. More information about the other risks and uncertainties that could affect our business are listed in our filings with the Securities and Exchange Commission (the “SEC”) and available on the SEC’s website at www.sec.gov, including our Quarterly Report on Form 10-Q filed with the SEC on May 5, 2014, to which your attention is directed. We do not undertake any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise, except as otherwise required by law.

 

This presentation contains financial measures defined as non-GAAP by the SEC. We believe that certain non-GAAP financial measures, when presented in conjunction with comparable GAAP (Generally Accepted Accounting Principles) measures, are useful because that information is an appropriate measure for evaluating our operating performance. Non-GAAP information is used to evaluate business performance and management's effectiveness. These measures should be considered in addition to, not as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. Non-GAAP financial measures may not be calculated in the same manner by all companies and therefore may not be comparable.

3© 2013 HGST, INC.

Agenda

Who is HGST?

The Data Center Evolution

Enterprise Solid State Drives

A New Platform for the Future

The Future of Data Storage

4© 2013 HGST, INC.

Our Heritage

HGST and WD are independent subsidiaries of Western Digital Corporation Both subsidiaries are realizing superior financial performance

5© 2013 HGST, INC.

Heritage of Innovation and Industry Firsts

1950 2000 Today

1979 Thin Film Heads

1991MR Heads

1997 GMR Heads

2000 National Medal of Technology

2001AFC Media

2007First 1TBHDD

2012 Helium

Technology

2013 10-nanometerPatterned-BitMilestone

1973Winchester DiskIBM 3340 – fatherof the modern HDD

1978First disk array subsystem patent

1962 Hydrodynamic

Air Bearing Sliders

1990 PRML

Channel

1997Ramp Load/Unload

1994First 3.5”

Enterprise HDD with

1M hr MTBF

19991” Microdrive

20062.5” PMR HDDfor high-volumeOEM use

2004First 5-platter 3.5”design

2011 First 7200 RPM Enterprise HDD with 2M hr MTBF rating

2010First 7200 RPM7mm 2.5” HDD

1956 – RAMACInvented First Hard Drive

6© 2013 HGST, INC.

2012–2020 Storage Trends

Of the exabytes stored on HDDs and SSDs, over 85% in 2020 will be stored on HDDs

Source: HGST analysis

Personal CE

Cloud

Exabyte Forecast by Application

Client PC

TabletsSmart/Feature Phones

7© 2013 HGST, INC.

2012 2013 2014 2015 2016 2017 2018 2019 20200

1,000

2,000

3,000

4,000

5,000

EB

HDD Exabyte Outlook: CAGR 35%

Areal Density Progress

HAMR

15% CAGR

25-30% CAGR

Average head and disk count per drive will continue to increase

Gap

Exabyte vs. Areal Density Growth

HDD Component Usage Dynamics

8© 2013 HGST, INC.

Large and Growing Market

2012 2013 2014 2015 20160

100

200

300

400

500

600

700

Enterprise SSD

Personal Storage

Enterprise (High Cap)

Consumer Electronics

Desktop PC

Mobile PC

Enterprise (Performance)

Un

its

(M

)

2012 - 2016 Growth Rate is 3.1%

2012-16 Industry Growth (CAGR)

47.4%

21.9%

17.6%

2.4%

- 1.7%

- 3.9%

- 7.2%

Source: IDC Market Analysis: Storage Mechanisms: Disk - Worldwide Hard Disk Drive 2012-2017 Forecast: Adjusting to the IT Industry's Transformation

9© 2013 HGST, INC.9

Parallel Growth RatesAREAL DENSITY GROWTH

2010 2012 2014 2016 2018 2020100

1000

10000

Are

al D

en

sity

(M

b/m

m2

)

Conventional FG NAND

HAMR/BPM/TDMR

Dual FG

3D

RRAM X-point ArrayExtension

Invention

ExistingHDD

Source: HGST analysis

HAMR

Conventional PMR

Shingle/PMR

© 2013 HGST, INC.

Data Center EvolutionTrends Driving Change and Growth

11© 2013 HGST, INC.

What’s Driving the Data Center Evolution

12© 2013 HGST, INC.

Enterprise Market Outlook

2011 2012 2013 2014 2015 20160

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

M U

nit

s

Market Trends Customized architectures with

Open Source software and hardware

Customer fragmentation & sole-sourcing

Cloud is a capacity and roadmap driver

SSD becoming a key storage tier

New capacity drivers: big data analytics & cold storage

TCO becoming a critical decision making factor

Capacity Enterprise

Performance Enterprise

Enterprise SSD

2.5”

3.5”

Source: IDC

13© 2013 HGST, INC.

Optimized Solutions

Dynamic Workloads

Replication & Erasure Coding

Free-Air Environments

Petabytes to Exabytes

Free & Forever Storage

General Purpose Solutions

Predictable Workloads

RAID Protected

Controlled Environments

Terabytes to Petabytes

Business Critical Storage

Data Center Segmentation

TCO is Critical to Both Data Center Types

Hyperscale Data CentersTraditional Data Centers

14© 2013 HGST, INC.

Device reliability

Power consumption and cooling costs

Equipment acquisition costs

Bandwidth in the datacenter

Security

Server and storage density vs. floor space costs

Need bulk storage solutions for content, backup, disaster recovery

Management / Administration: Data, Storage, Server, Network

Drivers of Opportunity

Hyperscale Data Center Pain Points

15© 2013 HGST, INC.

Digital Storage Growth Outpacing Flat IT Budgets

2012 2022

Flat IT Budgets

Capacity

Cold Storage

Digital StorageAnnual Growth~50%

This Gap Requires: Lower CapEx Lowest TCO Differentiated

Product Offerings

Source: IDC & HGST analysis

16© 2013 HGST, INC.

HGST’s View on Storage Tiering

Ultr

asta

r Cla

ss –

1.4

-2.0

M M

TBF

800K

M

TBF

Highest Performance

High Performance and

High Reliability

High Capacity and

High Reliability

High Capacity and

Low Workload Optimized

New Storage class that

is lowest $/TB?

COOL

COOLER

COLD

HOT

WARM

17© 2013 HGST, INC.

Data CenterApplications

Application Segmentation

Cold Storage

Cloud Storage Data Warehouse Archive Backup Big Data Storage Long-Tail Content Regulatory Driven Archive

Consumer Driven Social Media Content

Medical Records Email Archive

Performance

Databases / OLTP

Content Serving

Business Intelligence

Cloud Gaming

Capacity

Cloud Computing

Virtualized ServersSocial NetworksCloud StorageBig Data StorageLong-Tail ContentCRMHPC

Value

Cloud Storage Big Data

StorageLong-Tail ContentMail ServersFinancialVideo on DemandSurveillance

Enterprise SSD

HF Trading Big Data

Analytics Indexing Databases /

OLTP High Density

VDI

Data Type HOT WARM COOL COOLER COLD

Choose the RIGHT Drive for the RIGHT Application

18© 2013 HGST, INC.

Selecting the Right Drive for the Right Workload

Cold Storage

Performance

Capacity

Value

Enterprise SSD

Data Type HOT WARM COOL COOLER COLD

₵₵₵$$$$ $$$ $$

1 in 1017 1 in 1016 1 in 1015

600K 600K

5 years 5 years 5 years1.2 – 2 Mh 1.2 – 2 Mh 1.2 – 2 Mh

Emerging Market Being

Defined

550TB/year 550TB/yearN/A

N/A

$

1 in 1014

300K

180TB/year

3 years800K

Workload

$/GB

Error RateLoad/UnloadCycles

WarrantyMTBF

Ultrastar Enterprise SSDs Ultrastar 10K and 15K HDDs Ultrastar 7K4000 SAS/SATA MegaScale DC™ Low-workload New HDD Innovation

© 2013 HGST, INC.

Enterprise SSDsStorage Solutions for the Most Demanding Data Center Applications

20© 2013 HGST, INC.

Enterprise SSD – Forecast

2012 2013 2014 2015 2016 2017 -

2,000

4,000

6,000

8,000

10,000

12,000

14,000

Enterprise SSD – Units (M)

2012 2013 2014 2015 2016 2017$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

Enterprise SSD – Revenue (B)

SAS & PCIe represent majority of future Enterprise SSD revenue opportunity while SATA maintains a strong unit position

PCIe

SAS

SATA/SATAe

PCIe

SAS

SATA/SATAe

Source : HGST

21© 2013 HGST, INC.

Broad PCIe and SAS SSD product portfolio Server and storage fabric-wide software solutions

Application Acceleration &

Workload Optimization

Shared access to distributed SSDs Advanced single- and multi-server caching Health monitoring IO system analysis

Simplified Integration & Management

Higher compute resource efficiency Reduced I/O and shared network bottlenecks High availability and endurance Lower power consumption

Improved Data Center Economics

HGST: Powering The Next-Generation Data CenterSolutions for the Converged Infrastructure

22© 2013 HGST, INC.

Increasing Value to Customers Through Intelligent Device Strategy

Applications

Processing

Storage

HDD

Intel JDA

SSD

sTec

EnhancedController

SSD

VeloBit

AdvancedCaching

Virident

App-Optimized FlashShared Server FlashFlash-Aware App API

SWSW

23© 2013 HGST, INC.

HGST Intelligent Storage SolutionsIndustry-leading SSDs with system and application optimized software

SAS PCIe

s800 Series Ultrastar SSD800xx/SSD1000xx

s1100-SeriesVirident

FlashMAX II

HA, Shared Access, Caching

Virident vFAS Software Technology

Virident FlashMAX Connect Software

Suite

EnhanceIO Caching Software

SDM Device Management Software

Industry-proven, award-winning SAS SSDs

Mainstream SAS SSDs & unique configurations

(1.8”, 2TB)

High Performance PCIe SSD platform with unique

software capabilities

Mainstream PCIe SSDs w/high endurance

The Sealed Helium HDDA Storage Platform for the Future

25© 2013 HGST, INC.

Time For A New Class of HDDsChallenges, Opportunities & Growth

Unprecedented Storage Demand

Areal Density Slow-Down Recording Technology

Challenges

Total Cost of Ownership Hyperscale Datacenter

Pain Points

~50% CAGR

26© 2013 HGST, INC.

~23% Mechanical

PowerSavings

Air – 5 Disk

AirO

NON

Disk Rotation Helium Reduced

Flutter

Thinner Platters

Less MotorDrag

Disk Flutter&

Vibration

Disk Rotation

O

N Nitrogen

Oxygen

Helium

4◦C cooler operation 49% reduction in watts/TB

Helium – 7 Disk

How It Works Reduces mechanical power dissipated in air shear Allows platters to be placed closer together enabling more capacity

27© 2013 HGST, INC.

INTRODUCING

Ultrastar® He6

6TB

World’s First 6TB 3.5-inch Helium Drive

4oCCOOLER

50%MORE

CAPACITY

23%LOWERPOWER

Worksw/ Existing

3.5”SMR/HAMRCOMPATIBLE

30%QUIETER

50gLIGHTER

28© 2013 HGST, INC.

Air vs. HeliumSame Form Factor – Exponential Difference

5-diskdesign

Same 1”z-height

4TB 6TB

7Stac™Design

29© 2013 HGST, INC.

Reducing TCO with Ultrastar He6

TCOptimized™

Power Consumption: Watts/TB

Cooling Efficiency: BTU/TB

Density / Footprint: TB/SqFt

Long-Term Reliability: MTBF

Acquisition Costs: $/GB

Reduced System Weight

30© 2013 HGST, INC.

Deploying 11PB of Storage:Conventional HDDs vs. Ultrastar He6

HelioSealPlatform

Advantage

57% less power (HDD only)

33% less space Less complexity

The above TCO's are estimates only.  Individual TCO may vary.

Using 4 TB 3.5” Conventional HDDs

12Racks

240Enclosures

2,880HDDs

32.8KW192Sq ft

>500cables

Using 6 TB 3.5” Sealed HDDs

8Racks

160Enclosures

1,920HDDs

14.0KW128Sq ft

>350cables

31© 2013 HGST, INC.

22-33% TCO

Savings

Hyperscale Datacenter TCOConventional 5D HDDs Ultrastar He6 with

HelioSeal Platform

Reductions in both CAPEX & OPEX Cooler, lower-power HDDs reduce power & cooling costs Fewer, denser servers = less networking infrastructure, less space, less power, less cooling Lower complexity, less maintenance

The above TCO's are estimates only.  Individual TCO may vary

Costs include TOR and aggregator costs & power into “rack cost”; “Server cost” is the customer cost of a complete 2U-12 server without HDDs. TCO savings vary based on PUE, cost of power, server type/density

HDD

Rack/Network

Server

Power

CoolingFloor Space

HDD

Rack/NetworkServer

Power

Cooling

Floor Space

32© 2013 HGST, INC.

Other TCO Considerations

Data centers within metropolitan areas face additional constraints and challenges:

– May not be able to acquire additional floor space

– May not be able to get adequate power

– May not be able to provide adequate cooling: “Free-Air” cooling not available in these environments

– Floor loading limits—typically ~2000lbs./sqft but varies by locality and individual building

The HelioSeal Platform’s high density, lower power and cooler operation solvesproblems for hyperscale datacenters, co-location facilities and internal IT

33© 2013 HGST, INC.

New Emerging Class of Data CentersNew Coolant Technologies, New HDD Opportunities

Data center designers and server vendors are continuing to pack more capability into smaller spaces

– Modular and “container” datacenters

– Servers with faster CPUs and more cores

– More servers in a given volumetric space

– Desire to place storage “closer” to compute node

Effective cooling is becoming a new challenge– Hotter components

– Less space for efficient airflow

– The HDD blocks even more airflow

34© 2013 HGST, INC.

Ultrastar He6 Naturally Designed for Immersion Cooled Data Centers

Growing interest in immersion cooling – Servers immersed in a non-conductive liquid

– Liquids can remove heat more efficiently

Limitations with current HDDs– High-density solutions w/ local storage can not be immersed

– Traditional HDDs “need to breathe”

Ultrastar He6 uniquely suitable for immersion cooling

Ultrastar He6 operates in non-conductive liquids

Photo used with permission from www.grcooling.com

Nov 4-7, 2013Booth #209

LIVE DEMOSanta Clara Convention Center

35© 2013 HGST, INC.

A Foundation For The Next 10+ YearsMuch More Than a Capacity Bump

The HelioSeal Platform provides immediate benefits and will add to the value of other HDD innovations

Higher Capacities

Better TCO

Emerging and future HDD technologies will be built on the HelioSeal Platform, enabling additional value

SMR

HAMR

Other Technologies

Future of Data Storage

37© 2013 HGST, INC.

Shingled Magnetic Recording (SMR)

Write ‘over-lapping’Data tracks

Track pitch

Read Data tracks

Concept Write head wider than track pitch and overwrites data several tracks wide Read track width is determined by how much the head is incremented radially

between writes Track pitch is determined by servo control rather than head physical dimensions

38© 2013 HGST, INC.

Industry projecting the introduction of HAMR technology in 2016-2017

HAMR : A Whole New Recording System

Heat-Assisted Magnetic Recording (HAMR)

Density growth limited by ability to make smaller bits thermally stable HAMR combines laser and magnetic field to write the media Allows for use of much higher coercivity media and hence enables higher densities

dx

dT

dT

dH

dx

dHkeff

39© 2013 HGST, INC.

Bit Patterned Media

Extend density by replacing randomly sputtered grains with very uniform, lithographically-defined magnetic islands

The challenge for bit patterned media is how to fabricate these very small islands precisely and cost-effectively

Feature sizes will need to be smaller than semiconductor

Granular Media versus Bit Patterned Media

100 nm

Have already demonstrated all the steps necessary for 13nm half pitch

40© 2013 HGST, INC.

Storage Central to Evolving Ecosystem

Big Data Storage

Cold Storage

Big Data Analytics

Ecosystem Trends

New Measures: TCO

New Applications

Cloud Computing

Storage is at the Center

Customer Complexity

41© 2013 HGST, INC.

Capacity & Trademark Statements

This information is presented as of November 6, 2013, and HGST does not undertake any obligation to update any of the information

provided.

One gigabyte (GB) is equal to one billion bytes, one terabyte (TB) equals 1,000GB (one trillion bytes), and one petabyte

(PB) equals 1,000TB (one quadrillion bytes) when referring to hard drive or solid state drive capacity. Accessible capacity

will vary from the stated capacity due to formatting and partitioning of the drive, the computer’s operating system, and

other factors.

Ultrastar, MegaScale, HelioSeal, 7Stac, Virident, and FlashMAX are trademarks or registered trademarks of HGST, Inc.

HGST trademarks are intended and authorized for use only in countries and jurisdictions in which HGST has obtained the

rights to use, market and advertise the brand. HGST shall not be liable to third parties for unauthorized use of this

document or unauthorized use of its trademarks.

All other company names, products or trademarks used in this presentation are the marks of their respective owners, and

not HGST.

© 2013 HGST, INC.

Steve CampbellChief Technology Officer

Navigating Storage in a Cloudy Environment