Low-cost storage benefits HDD industry

HDD industry is looking healthy

Seagate is leading the HDD market.

Seagate Technology leads a thriving hard-disk drive (HDD) industry, driven by demand for low-cost, high-capacity storage devices, according to analyst iSuppli.

Unlike the Nand flash chip industry, HDD vendors resisted the worst of the economic slowdown by learning to control their costs, argued Krishna Chander, senior analyst for storage systems at iSuppli.

The industry also got lucky with rising demand for more storage in PCs because new applications call for more HDD capacity.

The threat of solid-state disk has not materialised yet, as HDD offers a cheap practical answer to today’s challenges, i-Suppli added.

“Provided demand for low-cost storage capacity keeps rising, the HDD industry will find ways to deliver,” said Chander.
In the first quarter of 2008, HDD vendors shipped 137 million units, up 21 per cent year on year.

Most went to five segments: mobile computers, desktop PCs, consumer electronics, external drives and enterprise applications. The enterprise applications demand either serial advanced technology attachment (SATA) or serial attached SCSI (SAS) drives.

HDD vendors reported healthy operating margins in the first quarter of the year. Seagate reported $363m (£183m) in profits, or 11.7 per cent of revenue; Western Digital announced $298m, representing a 14 per cent return; and Hitachi GST stated it had earned $65m, or 4.6 percent of revenue.

For Hitachi GST, this was a desirable outcome after many quarters of being in the red.
“The US recession had no material impact on the HDD industry during the past two quarters,” said Chander.

Western Digital’s chief executive John Coyne said fiscal 2008 was an outstanding year for the hard-disk maker. “Our financial performance reflects the efficiency of the business models we have all built and refined over the past several years.”