A Shifting Landscape
We have seen some interesting market shifts in the storage market that will define the market for the next several quarters. The recent consumer electronics show in Las Vegas was a harbinger of things to come as hard drive manufactures diversify the uses of hard drives outside of their core customer profile.
We have finally reached the well publicized pull out of Seagate from the SCSI market which is sure to test the resources of OEMs.
PSG
The PSG market defies tradition as it carries its 4th quarter strength into the New Year. We are still seeing product on allocation and extended lead times. It is evident by the record number of exhibitors displaying storage in their products at the consumer electronics show, we expect to see a tight market to carry into the next quarter as manufacturers look to support emerging markets.
Large capacities drives of 750GB and 1TB continue to be scarce in the market, especially in PATA product where demand outstrips supply. Manufacturers are citing the testing time and limited test beds for large capacity drives as the primary bottle neck.
Open market activity for capacities of 250GB-500GB is fairly active with markets moving away from the lower end capacities and shifting towards the mid size capacities as pricing for 300GB and 400GB reach parity with 250GB and 320GB capacities.
SATA continues to advance its dominant position as third world markets begin to transition away from PATA. Roughly ten percent of open market demand is driven by PATA with the lion’s share of demand for SATA. The cost pressures of the external drive market continues
to drive limited PATA sales as PATA technology falls into obscurity.
At the low end of capacity we have seen virtually no 40GB demand as 80GB becomes the new bottom rung for capacity.
Notebook
Following the traditional seasonal demand pattern, we have seen the notebook market slow down as demand following the holidays has retreated. As demand eases, we have seen a build up in excess product which in turn has put downward pressure on pricing. We have seen 80GB and 120GB pricing drop approximately 10% over the past month while pricing for main stream capacities of 120GB-160GB has moved downward roughly 3-5%. While pricing for large capacities sizes of 200GB and 250GB has held steady.
Similar to the PSG market, SATA technology has become the technology of choice with roughly 80% of open market demand for SATA technology.
SCSI
As expected, the SCSI market has become a focal point for OEMs as the reality of Seagate (the dominant supplier) shifting capacity away from 10k SCSI sets in. Transitioning to SATA is not an option. Many OEMs have been unwilling to stock product to service long term service contracts thinking they can upgrade to 15K speeds. However, many are finding that transitioning to 15k speeds is not as seamless as expected due to overheating in many applications.
Seagate abandoning the 10k speed has opened the market for Hitachi and Fujitsu as more engineers are designing their products to support the short fall.
We have seen strong open market demand for 36GB thru 300GB 68pin and 80pin product, resulting in upward pricing pressure. Seagate is holding firm on pricing as it exits the market. This indicates that pricing will only continue to increase. We expect to see the market very active over the next few months as OEMs look to fill the gap with spot buys as they develop their transition plan.
