Although factories in Thailand are still cleaning up from last year's floods, production of hard disk drives is expected to return to preflood levels in the second half of this year, reports IDC. By the end of 2012, the HDD industry is expected to grow by as much as 7.7 percent, IDC forecasts.
Because HDD prices have moved up, revenue growth is expected to outpace unit shipments. If the industry is successful in manufacturing hybrid solid state hard drives (hybrid SSHDs), industry revenue could approach $50 billion by 2016 with a 2011-2016 CAGR of 8.6 percent, IDC estimates. "In many respects, the hard disk drive industry has collectively hit the 'reset button,' " said John Rydning, research vice president, Hard Disk Drives at IDC, in a press release.
The IDC reports on two major themes affecting the HDD forecast:
One... is the shift in demand for HDDs in client devices. While PCs will continue to represent the largest market for HDDs in terms of unit shipments, revenue derived from HDDs shipped for PCs is projected to decline over the next five years. In contrast, HDD demand from personal storage, entry-level storage, and enterprise applications (combined) is increasing. This reflects the broader trend to store more content in large datacenters and centralized storage devices in the home or in small businesses, thus making content accessible to a wide range of consumption platforms, including media tablets, smartphones, PCs, and other connected wireless devices. The longer-term implication is that enterprise storage -- as opposed to storage in PCs and CE devices -- will at some point become the major consumer of HDDs, as it was early in the life of the HDD market.
Another important theme is the intensifying battle with solid state drives (SSDs) in notebook PCs. While SSDs offer some performance advantages over conventional HDDs, SSD pricing continues to be an inhibitor to adoption in new PCs. Another way to achieve faster PC performance without incurring the full costs of SSD is to use a smaller amount of NAND somewhere in the PC system in combination with rotating magnetic disk storage. To win this battle, HDD vendors will need to convince PC manufacturers that hybrid SSHDs offer a more cost-effective solution to improve PC performance and responsiveness than other solutions.
HDD supplies have continued to be a question mark in many business forecasts for 2012. As of Q4 2011, HDD suppliers were still uncertain when production would again ramp up. Although global electronics distributors Arrow Electronics Inc. (NYSE: ARW) and Avnet Inc. (NYSE: AVT) do not play heavily in the HDD market, the topic dominated analysts' Q&A in their most recent reporting periods.
@jacob: I'm a little out of my depth here, but I believe storage is moving toward chip-based solutions, eliminating the need for a hard drive. So far that has been limited to tablets and ultrabooks that aim to be small and thin. I think there will evenutally be an alternative to HDDs, but I also think there will be demand for the devices for a long time to come. The supplier base has consolidated becuase they have become low-margin products, and we've finally seen the danger in that: too few companies concentrtaed in a single area.
It is good news across the board to see Thailand and its manufacturing is recovering well. I'm am interested to see what it is going to take to implement these hybrid drives in a larger capacity. Is it purely cost, or are there other disadvantages?
Barbara, I think there should be some alternate solutions for storage technology. Like Apple is offering icloud, we have to prefer cloud data storage solutions. By this demand for storage at device level can be get minimized and all other storage requirements can be get satisfied through cloud access.
It is funny how HDD volumes started in Enterprise, moved to Consumer and looks set to move back to Enterprise. It would also be interesting to see some comparative price points for HDD, SSD, and hybrid storage for a couple of different memory sizes.
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