Only because up until recently getting in the HD game was prohibitively expensive due to the engineering and capital requirements for designing spinning disks. Now anyone can buy some flash media, a pre-cooked controller firmware, combine the two and sell at competitive rates. There are something like five or six competitive SSD makers right now and many more bottom feeders. There are two competitive spinning disk makers and its been that way for decades, ignoring the occasional small third-party player like Hitachi.
But they're still in business making hard drives, under the DeskStar name. Seagate had a round of failures at one point. I'm sure there are people out there who've sworn off WD as well.
Who? If you're referring to IBM, then they're not. IBM sold off their entire hard-disk division to Hitachi (which a few years ago sold it off to WD).
If you're referring to Hitachi, then they did continue it, yes, but they bought it on a fire-sale, and their name was not attached to the original affair, so they presumably did not see it as particularly risky.
Is Seagate back to being good? We had 100 drive failures in a batch of 120 HP netbooks, and we had a large number of our server drives go down the tube. I switched to WD at that point.