Buffalo Number One in NAS

Headquartered in Japan, Buffalo Inc., part of the Japanese Melco Group, is a company with a unique business model compared to NAS competitors.

Its catalog of 40 pages of peripherals for digital home and computers contains several hundreds of products for consumer users from network devices to USB keys, flash cards, RAM memories, internal and external HDDs, NAS, optical disc drives, DVRs , mouses, projectors, cables, even plastic protection for iPhone screen, etc.

Born in May 1975, family business Melco began as vendor of audio equipment . Today the slogan of Melco and Buffalo CEO Makato Mak, is:” Make people’s digital life enjoyable.”

The name of Buffalo, American bison, is derived from “printer buffer” named Buffalo, a PC peripheral first marketed by Melco in 1982. The subsidiary entered into the HDD market in 1994, now with offices in Brazil, France, Taiwan, The Netherlands, UK and USA.

The Japanese group currently owns 18 subsidiaries and expects revenue of ¥138 billion for FY ending March 2013, +17.6% compared to 2012, with net income of ¥5.4 billion (+21.5%). It employs 875 people including 438 at Buffalo with storage sales representing ¥64.2 billion for the same period or 46.5% of the total of the group.
Melco Yearly Sales
(FY ended in March)

(in ¥ billion)

* HDDs/SSDs, optical drives and NAS from Buffalo
** Forecast

Outside Asia, Buffalo Technology is mainly known for its storage products, external HDDs and NAS subsystems.

Since 2009 its storage revenue is flat or going down following the growing presence of Seagate and WD now in front of Buffalo in the WW market of external HDDs. Furthermore, in FY12, Buffalo suffers from Thai flood and price pressure, external HDDs being principally affected. Units shipped were down 9.6% Y/Y with revenues decreasing 12.5% to ¥37.0 billion. NAS got better results for the period, volume increasing 3.5% with sales up 4.1% to ¥13.2 billion.

In a recent report from Gartner covering calendar year 2011, Buffalo is positioned at the fourth place in WW NAS units shipped with 12.9%, behind Netgear at 16.4%, Qnap at 13.8%, 3/ Synology at 13.5%, but with a decrease of 7.9% compared to 2010 in number of NAS sold.

For devices at less than $5,000, Buffalo is also number 4 in 2011 with 90,955 units behind Netgear (108,876), Qnap (97,554) and Synology (94,338). In revenue, the ranking is the same: 1/ Netgear $84.7 million, 2/ Qnap $79.3 million, 3/ Synology $57.3 million, 4/ Buffalo $46.2 million (but down 12.5% from 2010).

Buffalo seems to be the incontestable leader in external HDDs and NAS in Japan, in front of I-O Data Device, Inc. but has difficulties to impose its presence outside Asia. Especially in Europe, it has to invest much more in marketing to be recognized as a popular storage player. Another problem is the fact that the company does not offer chassis without HDDs on the continent like in Japan and USA – only NAS populated with drives – an offering successful for some of its competitors (Synology and others), as well as the possibility to download the software managing the NAS. The end user is obliged to get it by acquiring a Buffalo NAS with at least one HDD where this software is recorded. But the company is working currently to avoid this difficulty.

Like several Taiwanese NAS manufacturers, Buffalo is entering in unified enterprise NAS/iSCSI with its Terastation line integrating up to 12 bays on the 2U 7000 rackmount model (from €2,559 with 8TB on four disks). It is also now in SSDs, the latest one being an external unit offering both USB 3.0 and Thunderbolt interfaces priced at €299 for 132GB and €499 for 256GB