Market Perspective Storage
Surprisingly the hard drive market is showing a level of resiliency that is atypical for this time of year when many liquidate inventory in the face of slumping sales following the holiday build season. While we are seeing expected price erosion for newly introduced capacities, (500GB and 750GB capacities) we are seeing pricing for mainstream capacities of 250GB, 300GB, and 320GB capacities holding steady. Support is coming from the demand of the desktop market and the personal storage segment, which is continuing to drive demand, as evidenced by the 15% increase in hard drive shipments for 2006. Adding further stability to the market is Seagate’s acquisition of Maxtor, giving greater control of market pricing to the dominant player in the hard drive market.
Desktop Market/IE
The desktop market continues to remain stable throughout the first quarter with shipment volumes and pricing holding firm. 500GB and 5750GB capacities are dropping in price which is typical for new product introductions into the market. The open market continues to see strong demand for 250GB and 320GB capacities, with much of the demand driven by set top box manufacturers and external HDD manufacturers. Expect to see the recent introduction of the terabyte drive to accelerate the transition to higher capacities drives. This will further erode prices across all product capacities.
Mobile Market
Horizon is seeing prices for 40GB capacities drop as availabilities outstrip demand resulting from the market transitioning to 80GB capacities as the mainstream notebook drive. Prices for 80GB and 100GB capacities have been holding steady with product readily available. However, we are seeing strong open market demand for 120GB and 160GB capacities, with product increasing to a 10 to 20% premium, depending on manufacturer and part number.
Unlike the desktop market, where demand has transitioned to SATA as the main stream technology, the notebook market has been slower to adopt SATA technology. Since Seagate's announcement of its new Savios line of drives, there is talk in the market about moving mobile drives into desktop and server applications. These drives not only have the capacity to match the mainstream capacity in IDE but also can now compete with the SCSI market with its large capacities and 15k rpm speed. This is something that can inexorably impact the market over the next several months and the market must pay attention to it.
The 1.8" market has been dominated by Apple products. However with the capacities increasing to 60GB and above, we are seeing slim line notebooks and external drive manufacturers competing for capacity. Inevitably, this will shake up the market as we know it today.
To date Toshiba still holds the largest market share. Horizon is seeing older generation drives in 30GB and 60GB capacities more and more readily available, resulting in decreased pricing. The newer generation product continues to fetch price premiums with moderate to limited supply.
Enterprise Market
The enterprise market remains fairly quiet with the only event of significance being Seagate dropping all 68pin parts out of their production lines at the close of the 2nd quarter. Inevitably this will lead to spot shortages. We are already seeing 18GB, 36GB, and 73GB 68pin showing signs of slight shortages in the market. Even though there is a shortage of drives, the demand is limited. It will be interesting to see how the OEM’s transition into strictly 80pin and FC connectors.
