History 2002: HDD Industry Hit Bottom in 2001

The HDD industry endured an 18% revenue decline in 2001, according to a research report just published by Trendfocus.

Unit sales to traditional computing applications dipped 4% last year as well, as demand eroded due to slumping PC and server sales.

However, 2001 should prove to be the low point for the industry, as growth in storage demand will resume in 2002, according to the Computer Storage Demand Analysis System report.

“The HDD industry came through 2001 smarter,” stated Mark Geenen, president, Trendfocus. “Traditionally, weak demand meant HOD price wars. This didn’t occur in 2001.”

PC sales will rebound in 2002, as will demand from enterprise storage applications. HDD shipments to traditional computing applications will grow 7% through 2005.

“This dynamic market will continue to evolve quickly, fostering a tremendously competitive environment,” reported John Donovan, VP, Trendfocus.

Key points include:

• PC storage capacities for desktop computers will grow from 20-40GB in 2001 to over 200GB in 2005, as applications like video editing and digital photography are fostered by broadband Internet connections.
• After a decline in shipments of enterprise HDDs, this market will firm and grow through 2005. 15,000rpm drives will take over the enterprise HDD market in 2004, and will be followed by 20,000+rpm products.
• Technically, the HDD industry will be a hotbed of innovation and progress.

Areal density growth, while slowing, will continue to outstrip Moore’s Law of semiconductor development. 2.5-inch and smaller drives have an opportunity to invade the desktop PC market, provided that prices are equivalent with those of 3.5-inch HDDs. And suppliers of technology and material to the HDD industry will finally see a reprieve in demand conditions, as changes in product design and technology will renew capital investment and greater reliance on outside sourcing.

“Our research clearly shows the HDD industry is on the rebound,” added Donovan. “And when you add the booming demand for HDDs in the consumer market, like home networks, gaming, personal video recorders, and MP3 players, there will be unprecedented opportunities in the HDD industry.”

This article is an abstract of news published on issue 171 on April 2002 from the former paper version of Computer Data Storage Newsletter.