Global shipments of Hard Disk Drives (HDDs) rose 15.5 percent in 2006, as suppliers managed to capitalize on growth opportunities while shrugging off challenges including price wars, component shortages and competitive upheavals, according to iSuppli Corp.
The HDD industry in 2006 shipped 434.2 million hard drives, up 15.5 percent from 375.8 million in 2005. In the fourth quarter of 2006, 119.7 million HDDs were shipped, up 15.8 percent compared to the same period a year earlier and an 8.3 percent increase from the third quarter.
Along with strong sales to established markets in computing and consumer-electronics products, the HDD industry benefited from the rise of a new application: external hard drives. In 2006, 2.6 million external HDDs were shipped, up 37 percent from 2005. Demand for external HDDs is being driven by the desire of consumers to store and backup large-sized video and audio files downloaded from Internet services.
Krishna Chander, senior analyst for storage systems at iSuppli, said, "What's impressive is these strong sales for HDD manufacturers came at a time when the industry was facing multiple challenges."
Seagate Technology's acquisition of competitor Maxtor spurred a price war in the first half of 2006 as HDD suppliers vied to capture a portion of the market-share vacuum left open by the merger. The industry also faced shortages of glass media, along with minor shortfalls of other components near the end of the year.
Meanwhile, demand slowed for tiny 1-inch HDDs because makers of MP3 players increasingly are turning away from rotating media and toward flash memory for music storage. As a result, small-sized HDD specialist Cornice Inc. declared that it was changing its business strategy of serving the MP3/PMP/mobile phone market by switching from selling HDDs to offering NAND-type flash memory based solutions.
Furthermore, 2006 saw the rise of a potentially competitive technology to HDDs in PCs: NAND flash-based drives. The arrival of Microsoft Corp.'s new Vista PC operating system, which supports hybrid flash/rotating media HDDs, and the introduction of Intel's Robson, has stimulated interest in the usage of flash memory for PC storage applications.
The top-two leading HDD suppliers (Seagate, WDC) also made gains in the fourth quarter of 2006. Seagate's share of 34.6 percent in the fourth quarter was up a notch from 34.3 percent in the third quarter. WDC held its second-place position at 20.5 percent, also up slightly from 19.9 percent in the previous quarter. However, number-three Hitachi GST's share was 17.2 percent, down slightly from 17.5 percent in the third quarter.
The near-term outlook for the HDD market continues to be positive in 2007. The industry is ably meeting challenges it faces on the business, technical and macroeconomic fronts. The industry's transition to Perpendicular Magnetic Recording (PMR) technology is going well, with practically every supplier stating that the move is proceeding without any major hiccups.
The HDD industry will continue its quest for new applications in 2007. One promising emerging application is known as the terabyte home. The terabyte home concept involves the use of ultra-high-capacity HDDs that can consolidate all consumer data storage needs into a single drive. Seagate, WDC and Hitachi GST are offering HDDs with capacities as high as 1Tbyte, suitable for the terabyte-home application.
The HDD industry continues to advance in terms of capacity, developing new applications and focusing on serving industry demand. Problems are being overcome, both on the technical and business fronts.
Last year was a good one for the HDD industry, and the outlook for 2007 is cautiously optimistic, with shipments expected to rise by about 17 percent, Chander predicted.
Source:
iSuppli
