The hard disk market is seeking a mechanism for economic recovery, and you may be surprised at the candidates. David Morgenstern offers a likely winner.
The beleaguered hard disk industry is on a quest for a holy grail: the strategy or technology that will get it back on its feet after a recessionary season in the wilderness.
That grail may be closer than you might think, or it may be further away; the proximity of recovery will be revealed by sales figures due out next month.
But which sales figures?
Some might guess that this grail would be an uptick in computer sales to consumers and especially to the enterprise. After all, businesses have skipped several chances to refresh their technology even with the advanced depreciation schedules now on the books. Once the economy gets beyond its current, cyclical ebb (these prognosticators advise), everything will be rosy again.
While this recipe for recovery contains a dollop of truth, a simple rise from recession wont bail out hard disk manufacturers. The rise and fall of computer sales is
their current business model. According to analysts, 75 percent of all hard drives manufactured around the world ship inside a desktop computer. And almost all the rest ship inside some kind of server product or in the so-called "aftermarket" for external drives.
Even if enterprise replacement cycles resume and manufacturers ramp up production, all they will see is a return to "normal."
Perhaps we should regard computer sales like rainfall patterns, with a current, normal and six-year average. Whats needed is something new and special that will lift hard disk manufacturers out of the usual boom and bust cycles.
The holy grail of the moment is the personal video recorder. All eyes in the storage industry are fixed on couch potatoes as a potentially huge new demographic for storage. They see the couch potato as the
source of growth for the industry.
Theres ready evidence from the manufacturers themselves. For example, take a look at Seagates Barracuda 5400.1 drive, announced the other week.
The company said the drive is "designed for applications that require low cost, high reliability, low acoustics, and the popular 40GB capacity sweet spot."
So wheres the sweet spot, exactly? First off, the Barracuda 5400.1 uses fewer parts. With an 80GB platter, the drive reads and writes to only a single side with a single head. That cuts down on manufacturing costs, yet provides enough capacity for an entry-level PVR. Hence, the sweet spot.
At the same time, the drive is thin, which lets it be used in consumer products without a fan. Thats an essential feature for the
PVR market, as well.
Of course, hard disk manufacturers believe that whats good for the PVR is good for almost any digital application. Besides the expected computer uses, Seagate suggests that the Barracuda 5400.1 should be considered by developers of game consoles, audio jukeboxes, ATMs, security cameras, printers and karaoke machines.(Thats the order in which Seagate lists these target markets.)
Unhappily for hard disk manufacturers, sales of personal video recorders have been slow. For all the buzz over the past several years, the current worldwide shipments of PVRs totals less than 1 million units.
Industry analysts point to a potentially enormous market for the technology, but they are all over the map about when this growth will occur. Some say that yearly shipments will total 12 million units, others twice that. Some say 6 million. Still, good growth.
So storage vendors will look forward to the results of the holiday seasonto glean sales of computers and particularly, the buying habits of couch potatoes.
David Morgenstern is a longtime watcher of the storage industry as well as a veteran of the dotcom boom in the storage-rich fields of professional content creation and digital video.