A Buyers Market
Historically, summer is the slowest season of the sales year and this year the trend is continuing. As a result, manufacturers and distributors are cautious about taking aggressive inventory positions during the summer. Instead, they are looking to quickly sell through their stock in order to avoid having excess stock in their inventory in a declining market. This proactive action taken by manufacturers and distributors has created an opportunity for Hard Drive consumers to realize the opportunity for cost savings by taking inventory positions against their forecasts before the fall - when the storage market typically rebounds and prices hold firm.
IDE
In typical fashion, the IDE market is cooling off as it normally does over the summer months. The two largest hard drive players were very aggressive with their quarter-end deals in order to meet quarterly numbers. At the end of June, key hard drive players were selling everything they could off of their shelves at an aggressive price. We were seeing authorized distributors trying to move their inventory with back end incentives from the manufacturers. We expect market pricing to continue to trend downward on the 250GB as well as the higher capacity drives. The 400GB and 500GB capacities have been affected by severe price drops in the market; resulting in a 15% decrease in price within the past thirty days. Contributing to the rapid price drop is the amount of excess stock available from OEM’s in the market.
The two new capacities introduced to the marketplace are the 750GB and 1TB (terabyte) drives. However, these two new capacities have yet to have impact on the market. The current sweet spot in the market is still occupied by 250GB and 320GB capacities. However, in order for the market to transition to 400GB and 500GB capacities we expect that manufacturers will drop prices to stimulate demand. This in combination with consumers gravitating towards more and more storage intensive applications will move 400GB plus capacities into the mainstream.
Mobile
As we had predicted over the past few quarters, the mobile market remains quiet. The consumer’s mentality continues to be very aggressive when it comes to pricing as the market continues to work off excess supplies. However, we are beginning to see demand rebounding for the 40-80GB capacities. Demand for capacities of 100GB and larger have been solely for the SATA interface; indicating that OEM’s have turned the corner on using mobile SATA and it looks like SATA will be the defacto standard. External manufacturers continue to buy PATA strictly due to the cost savings between PATA versus SATA.
1.8”
The market has transitioned to 60GB capacities and larger, with a lot of buzz around the 100GB Toshiba micro drive. In turn, manufacturers have quickly abandoned smaller capacities leaving very little available new inventory in the sub 40GB capacities. The transition of the micro drive to laptops has been cautious and one may feel the pinch of supply disruptions if the rumors continue and come true that Apple will be shipping its next generation IPOD with the 100GB capacity.
Enterprise
The SCSI market continues to be a very difficult market to navigate. OEM’s are receiving supplies direct from the manufacturers at aggressive pricing. The channel is helping manufacturers by taking risky stock positions at rock bottom pricing. This in turn allows OEM’s to leverage the best possible cost by securing product from a variety of choices. The choices include: direct from the manufacturer, the channel, and excess opportunities in the open market. OEM’s who are willing to be aggressive and are already planning for the fall will find themselves walking into tremendous cost savings opportunities. Additional incentives for OEM’s is the announcement made by Seagate that in the fall they will be transitioning out of the SCSI interface.
No major changes in the SAS and Fiber market. We still see some demand on 146GB FC and 300GB FC - whereas the SAS market still remains quiet.
