Brisk Tablet Sales Starting to Hurt HDD Market

At $28.1 billion, overall HDD revenue is 4.1 percent higher than the $27 billion reported in 2010, but is only about half the 7 percent expansion posted by the industry in 2010.

As companies like Hewlett-Packard, Lenovo and Dell have recently experienced with a drop in sales of their notebook PCs, the coming of the tablet is affecting the IT business in several areas.

While sales of solid-state NAND flash drives are expected to boom by 400 percent over the next year, researcher IHS iSuppli reported May 25 that the market for hard-disk drives used in computers of all kinds will slow down in 2011. Revenue growth this year in this sector will decelerate dramatically compared with 2010, the researcher said.

Revenue for computer HDDs, a category including drives for PCs and servers, is projected in 2011 to reach $28.1 billion. But even though this is 4.1 percent higher than the $27 billion reported in 2010, the anticipated HDD growth this year is only about half the 7 percent expansion posted by the industry last year.

Except for an expected growth spike in 2013 that will result in a 4.5 percent expansion of the market, IHS iSuppli said HDD revenue will continue to show ever-smaller increments of growth in the years to come, slipping to a 3.9 percent expansion in 2012, 2.8 percent in 2014 and 2.1 percent in 2015.

By the end of 2015, global computer HDD revenue is expected to reach $32.1 billion, the researcher said.

"The hegemony of PCs has been usurped as consumers increasingly use tablet devices and smart phones to browse the Internet, download and stream video and share content," said Fang Zhang, analyst for storage systems at IHS iSuppli.

"Tablets in particular are gobbling up consumer dollars originally intended for notebook and netbook computers. And because tablets use flash memory for data storage, rather than HDDs, this has translated into lost sales for the hard-drive industry."

In addition to the influence of tablets, HDD sales have been impacted by rival storage devices such as flash memory and solid-state drives eating into traditional hard-drive strongholds and showing up in devices like netbook computers.

On another front, HDD revenue growth has slowed as manufacturers introduced lower-priced drives with higher area densities, the result of constantly improving and evolving technology becoming more affordable over time, Zhang said.

A third factor that has slowed HDD growth is more efficient cloud storage, IHS iSuppli said. As consumers and corporate entities replace local storage and look to the cloud-where data is stored through networks, either privately or publicly-HDD makers lose another important piece of their market.