Hard-disk drive unit shipments worldwide experienced a year-over-year decline of 4.5 percent in 2011, due in part to massive and tragic natural disasters in Japan and Thailand, according to a report from IDC. Although efforts to clean and repair flooded factory buildings and equipment will take most of the first half of 2012, HDD and HDD component production is expected to return to pre-flood output levels in the second half of this year.
According to the IDC forecast, the HDD industry will record year-over-year unit shipment growth of 7.7 percent in 2012 and a compound annual growth rate (CAGR) of 9.6 percent from 2011 to 2016.
The report also noted that due to the imbalance in supply and demand resulting from the Thailand floods, HDD prices have moved higher in recent months, and HDD vendors are taking advantage of this opportunity to reset prices and recover some of the excessive price erosion that began in 2009. IDC said it expects year-over-year HDD revenue growth to exceed shipment growth in 2012, a precedent for the industry. Assuming the industry is successful with hybrid solid-state hard drives (hybrid SSHDs), industry revenue could approach $50 billion by 2016, with a CAGR from 2011 to 2016 of 8.6 percent.
"In many respects, the hard-disk drive industry has collectively hit the 'reset' button. A reset of the HDD industry structure should allow for the remaining HDD industry participants to slowly reduce HDD prices from current levels at a rate that still delivers value to customers, while at the same time ensuring sufficient funding is available to develop new HDD technologies that are needed to improve HDD capacity, performance, reliability, power consumption and security, said John Rydning, research vice president of hard disk drives at IDC. Still, long-term revenue growth will only be realized if the remaining participants transform into storage device and storage solution suppliers with a broad range of products for a wide variety of markets."
One major theme affecting the HDD forecast is the shift in demand for HDDs in client devices. While PCs will continue to represent the largest market for HDDs in terms of unit shipments, revenue derived from HDDs shipped for PCs is projected to decline over the next five years, the report said. In contrast, HDD demand from personal storage, entry-level storage and enterprise applications (combined) is increasing.
IDCs research said this reflects the broader trend to store more content in large data centers and centralized storage devices in the home or in small businesses, thus making content accessible to a wide range of consumption platforms, including media tablets, smartphones, PCs and other connected wireless devices. The report predicted a longer-term implication is that enterprise storageas opposed to storage in PCs and CE deviceswill at some point become the major consumer of HDDs, as it was early in the life of the HDD market.
The report also focuses on the intensifying battle with solid-state drives (SSDs) in notebook PCs. While SSDs offer some performance advantages over conventional HDDs, SSD pricing continues to be an inhibitor to adoption in new PCs. Another way to achieve faster PC performance without incurring the full costs of SSDs is to use a smaller amount of NAND somewhere in the PC system in combination with rotating magnetic disk storage, the report noted. To win this battle, HDD vendors will need to convince PC manufacturers that hybrid SSHDs offer a more cost-effective solution to improve PC performance and responsiveness than other solutions.