Storage Market Perspective

November 16, 2006

The Hard Drive Market Is Moving In Different Directions

The market continues to demonstrate its schizophrenic ways with increased pricing for large capacity IDE drives, while pricing for low capacity desktop drives languishes and note book drives continue to decrease.

As SATA continues to make inroads across all market segments, with 70% of new drives shipped with the SATA interface, we at Horizon are watching for potential issues developing for PATA products.

Desktop Market/IDE

Holiday demand driven by manufacturers of consumer electronics and external hard drives has been driving requirements for both PATA and SATA in capacities of 250 gigabyte capacities and larger in the open market. Specifically for 8MB 7,200 RPM specified drives in 250, 300, 400 and 500 gigabyte capacities in both PATA and SATA interfaces.

Pricing for lower capacity drives continues to trade in a narrow band as Seagate continues to protect its market share with pricing while Western Digital continues to hold the line on pricing.

Mobile Market

The 1.8” form factors is the darling of the market with strong demand across all capacities including; 20, 30 and 60 gigabyte capacities, primarily driven by IPOD repair. Horizon has yet to see any other consumers of micro drives enter the market with significant repair demand. However, as their product lines mature expect OEMs to enter the market, continuing to exasperate a shortage market as many of the early versions of drives have already been obsolete. It will be interesting to see what kind of impact the introduction of Microsoft’s Zune will have on the small form factor market.

Demand for 2.5” continues to weaken, with prices dropping quickly. Depending on manufacturer prices for 20, 30, 40, and 60 gigabyte capacities are all within a few dollars of each other.

Enterprise/SCSI

Indicative of SCSI market condition is the inability of higher RPM drives (10,000 and 15,000 RPM) to fetch premiums in the marketplace. The 36gigabyte drive is the new entry level SCSI hard drive replacing both 9 gigabyte and 18 gigabyte capacities. However, currently the market is in an overstock situation with excess stock circulating within the market. The only SCSI demand is for OEM specific tabbed product which is in a constant supporting service demand.

SATA continues its push into the enterprise market but has had little impact within the open market. We are seeing spot shortages for 300 gigabyte fiber channel product but there has been an adequate supply in order to meet Horizon’s demand.

For availability and pricing contact: 949.595.8244 or visit www.horizontechnology.com

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