Seagate Flooded

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Seagate (NYSE: STX  ) is losing more than staff, it's losing customers.

Last week, they flocked to support forums to complain about failures of its high-capacity Barracuda drives, Computerworld reports. The problems aren't isolated to a single operating system and tend to occur during data transfers.

Or, in simpler language: at the worst possible time.

What happened to the Seagate I know and once loved? If my Twitter feed is to be believed, investors who once considered this company the gold standard in disk drives now envision Western Digital (NYSE: WDC  ) and Hitachi (NYSE: HIT  ) taking share.

As tech entrepreneur and investor Sanjay Parekh put it, "With the oncoming onslaught of flash drives (let's hope), any slowdown/missteps will kill [Seagate]."

Flash drives are, indeed, catching on thanks to SanDisk (Nasdaq: SNDK  ) , Micron Technology (NYSE: MU  ) , and Intel (Nasdaq: INTC  ) , among others. The trouble with flash-equipped solid-state drives is that they're (a) expensive and (b) not nearly as dense as their optical and magnetic cousins.

For the most part, anyway. Start-up pureSilicon showed off a 1-terabyte solid-state drive at this year's Consumer Electronics Show in Las Vegas. If Parekh is correct, it's a terrible omen for Seagate -- especially in light of its expense cuts and product hiccups.

Seagate, for its part, issued a statement in which it says it will work with customers to expedite a remedy to "any disruption" created by problems with its newest Barracuda drives. Good. But investors are, rightly, expecting more.

Don't get me wrong; customer service is incredibly important. But it's also the minimum. Market leaders do more than tinker with existing problems. Instead, they create solutions to problems customers didn't realize they had.

They are, in other words, the innovators. Seagate was one, once. It needs to be again.

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Fool contributor Tim Beyers didn't own shares of any of the stocks mentioned in this article at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool. Its disclosure policy is spinning like a top. Or a disk drive.

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10/21/2016 4:00 PM
STX $34.50 Down -0.48 -1.37%
Seagate Technology CAPS Rating: ****
HTHIY $50.50 Up +0.13 +0.26%
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MU $16.94 Down -0.27 -1.54%
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