Maxtor was posting annual losses when it was acquired by Seagate in 2006. Although this merger solidified Seagate's lead in the market, profitability may decrease if redundant costs of the subsidiary are not reduced quickly.
Flash memory is a looming threat to the hard disk market. Such solid state devices consume less power, are faster, and are more reliable than hard disk drives because they contain no moving parts. As flash memory capacities increase and prices decrease, Seagate is vulnerable to a collapse of the market because it only manufactures hard drives, which may be a fading technology.