Hitachi (NYSE: HIT) made a bold move in 2002 when it purchased IBM (NYSE: IBM)'s hard drive business for $2 billion. At the time, the hard drive industry was in a profit funk and IBM was looking to exit the hardware business. It eventually sold its PC division to Chinese company Lenovo to complete its exit from hardware. Five years later, Hitachi probably wishes it had never gotten into hard drives.

Hitachi Global Storage Technologies, the division responsible for hard drive storage, has consistently lost money in the last two years as competitors Seagate Technology (NYSE: STX) and Western Digital (NYSE: WDC) have really taken advantage of home entertainment, laptop and TiVo-like devices that are infiltrating homes like stormtroopers. Sales have been very nice for both companies, which are profitable even after storage was considered a boring and dead field around the year 2000. Hitachi, though, has had no such luck. Instead of selling its hard drive division to a private equity firm, the Japanese conglomerate may be looking to Japanese competitors Toshiba and Fujitsu as partners to form a new hard drive company.

Silver Lake Partners, which helped take Seagate private in 2000 only to launch it as a public company a few years later, has reportedly been in talks with Hitachi. Nothing concrete was produced, and Hitachi even said it does not want to sell the division. If Hitachi is too steeped in Japanese culture to sell to outsiders, then it has to do something -- but its options may remain limited. And, Toshiba and Fujitsu -- both of which have small hard drive businesses -- may not want to take more risk in the storage business currently dominated by Seagate and Western Digital. Hitachi shareholders, hold no fear; most likely, some kind of decision will come before April 1 of this year.