Hard Disk Makers Hope for a Break
Over the past decade, hard disk manufacturers have kept up a breakneck pace of innovation, increasing capacity and performance. At the same time, their profits have dwindled. At last weeks DiskCON USA 2003 conference in San Jose, Calif., storage executives expressed hope that this progress will slow, bringing a rise in margins.
This annual gathering of the hard drive industrylongtimers debated whether it was the 17th or the 18th yearoffered a mix of technical and market-analysis sessions. Alongside sessions covering advances in head technology and coatings for platters, attendees heard sessions on changing requirements for enterprise drives as well as new markets such as automotive information systems and new portable capacities.
Here are some pieces of sessions that caught my imagination:
However, both panelists at the session said that (as was the case with past technology transitions) the current generation of parallel read-write designs should have additional life left in it. Drive manufacturers will likely use the familiar technology and delay the transition to perpendicular recording for at least another generation of hard drives, beyond 2006.
Mark Miller, technology analyst at Hoefer & Arnett Inc. investment bank said a "Perfect Storm" hit the hard drive industry in 1998. This was when the usual cycle of production over-capacity combined with the maturation of the desktop PC market segment ("maturation" is industry-speak for reduced demand); the rise of inexpensive consumer PCs (with their equally low-margin drives); and the race between manufacturers for areal density, which was sparked by the introduction of an improved head technology. All of these factors lead to shortened life-cycles and low margins for drives. It also dropped the number of parts in a drive by halfdriving some parts suppliers out of business.
Now, with consolidation hitting drive vendors and component suppliers, the pace should slow, letting manufacturers extend the life of a product line and thus make a bit more profit for a particular design and production run.
Hard drive vendors are moving more of their design and manufacturing efforts toward this market as well as consumer storage. Seagate Technology Inc. this summer said it will offer 2.5-inch drives for notebooks, and Donovan said another vendor will make an announcement shortly. Another analyst said Maxtor Corp. and Western Digital Corp. could enter the market. (For more information, see "Seagate Reenters Mobile Disk Drive Market.")
When adding up the potential capacity of these manufacturers, Donovan said that the total could approach between 15 million and 20 million drives per quarter, when the actual demand is in the range of 11 million drives. "Supply and demand can flip quickly," he said. "We see them getting near 20 million units, in a market not prepared for that."
While the market for these applications is small todaysome 5 percent of all hard disks slated to ship this yearIDC predicts the portion devoted to the consumer electronics segment will grow to 18 percent by 2007. And its a wide-open field using current 1.8-, 2.5- and 3.5-inch mechanisms (the latter because theyre cheap) as well as the new 1- and 0.8-inch disks.
Although the demand may be great, this trend toward consumer electronics holds its own share of difficulties.
"TV sets arent going to save the [hard disk] business," observed Mike Workman, president and CEO of SAN management vendor Pillar Data Systems. "The problem is that these consumer areas are even more cost-sensitive than PCs. A disk drive in every car would be great, but thats a tough environment."
A bumpy ridelike the storage industry.
Storage Center Editor David Morgenstern is a longtime reporter 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.