Storage Market
The fourth quarter is the most important quarter for both manufacturers and consumers of hard drives. This is when missed forecasts come home to roost. Consumer’s fickle buying patterns have historically been difficult to forecast as we are currently witnessing both desktop and hard drives on allocation.
The enterprise market has its own issues with Seagate exiting the 10k RPM market, requiring OEMs to make some hard decisions.
PSG
Not only have OEMs had to contend with Western Digital and Seagate raising prices in the middle of the busy holiday build schedule, but over the past week they are now seeing their lead times stretch as 80GB capacities through 500GB capacities get placed on allocation.
The allocation is affecting all manufacturers from low volume white box builders to tier one computer manufacturers. We are seeing brokers hitting the market hard with large volume requirements which will only add upward pressure on pricing for the existing stock that is left in the marketplace. Expect the allocation to last into the first quarter of 2008.
External hard drive manufacturers working on razor thin margins are the odd man out as they compete with Seagate and Western Digital for market share and have little room to absorb price increases.
Mobile
In response to continued increasing demand for Notebook and mobile applications, we have seen mid range drives (80GB-160GB capacities) go on allocation. Larger capacity drives of 200GB and 250GB are not experiencing any supply issues as the market has yet to adopt these sizes in volume. As a result, pricing for higher-end capacities has remained stable while the mid range capacities are seeing price increases. The increases are expected to continue into the first quarter of 2008.
The 1.8” open market activity has been non existent. Toshiba has changed their line of 20GB through 60GB drives, moving consumers to purchase newly introduced products. This has left an over abundance of obsolete products to support the service demand while the newly introduced products have yet to filter down to the open market.
Enterprise
The SCSI market will be going through a lot of changes over the next few quarters as Seagate will no longer support 10k RPM SCSI product, pushing manufacturing capacity to 15k RPM products. Companies requiring 10k RPM based products in order to support service demand will have to make some decisions when 10k product dries up in the distribution channel. Fujitsu and Hitachi will still be supporting 10k RPM product. But Seagate, who holds the largest market share, and is leaving the market, will cause major issues in the marketplace in the future. Due to thermal issues substituting a 15k RPM for 10k RPM it is not a fool proof solution, requiring many OEMs to establish contingency plans to support service demand.
