1Q15 HDD Shipments to Decline – Trendfocus

Here is an abstract of SDAS: HDD Information Service CQ4 2014 Quarterly Update and Long-Term Forecast, February 10, 2015, by analysts from Trendfocus, Inc.

CQ1 ’15 HDD shipments are forecasted to decline, and for the year, total HDD volumes are projected to be down 1.7%, to 554.25 million.

Longer-term, even with the robust nearline HDD forecast, gradually declining desktop PC sales along, flattish notebook PC numbers, and continued SSD encroachment will negatively impact the market.

Consequently, the HDD market is expected to fall 2.1% CAGR through 2019.

However, there are factors that could temper this decline. Trendfocus’ game console model is based on historical trends, and it asserts that follow-on game console sales never reach the levels of the prior generation’s model. As a result, game console HDD volumes are lower for each new generation. But, with China finally opening its doors for game console sales, it could lead to higher Xbox One and PlayStation 4 sales than our model suggests.

The other factor, which could sway HDD volumes, is capacity transitions. In our model, we expect nearline HDDs to continue to move steadily up the storage capacity curve. However, if the industry is unable to meet areal density transitions via new technologies, it may be forced to sell more HDDs to meet total storage requirements.

The down side to that model is that the number of components, especially disks and heads, might be insufficient to meet demand. As it is, the disk market is facing a serious supply constraint situation as early as 2016, so not transitioning to the next areal density point will exacerbate this issue.
 
Areal density transitions continue to be painfully slow because of the technical and cost challenges of new technologies such as HAMR.

HDD companies understand the ramifications of stalling PC demand along with growing SSD attach rates, so any significant investments to expand output capacity or for a costly technology change will be hard to justify. However, one area that will most likely require some funding is test. As nearline HDD volumes continue to expand, the long test times create a pinch point in the production process, which can only be addressed with additional testing equipment. Trendfocus expects several key decisive moves will be made by the HDD companies in the next one to two years to take advantage of the growing storage requirements.
 
Storage requirements continue to grow for certain applications. Exabytes shipped in 2014 rose over 15% Y-Y to 528.57, but with ever increasing datacenter storage needs, enterprise HDDs, especially nearline, are on the rise. The nearline HDD market is forecast to grow at a 9% CAGR through 2019, and will remain the main driver for exabyte growth.

With security concerns growing around the globe, the surveillance market is growing rapidly. HDDs used for surveillance are expected to increase in the upcoming years and be a positive contributor to the exabyte total. For this forecast period (through 2019), total HDD exabyte shipments are calculated to grow 16.4% CAGR to over 1.13ZB.
 
Despite the many challenges such as stalling client end-user storage requirements, the tapering game console demand as new platforms enter year two of existence, and the effects of SSD penetration on mobile HDD shipments, the HDD market recorded a respectable annual growth. Unfortunately, the effects from these challenges may become more pronounced this year, and the end result will be lower HDD demand. Quarterly and annual totals may dwindle, but overall volumes will remain larger than SSDs many years past the forecast period.