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Hard Disk Drive Shipments Rise 4 Percent in Second Quarter

EL SEGUNDO, CA — Despite the impact of the Japan earthquake, shipments of hard disk drives (HDD) edged up in the second quarter, according to a new IHS iSuppli Storage Space Market Brief from information and analysis provider IHS (NYSE: IHS).

For the quarter ending in June, HDD shipments amounted to 167.1 million units, up 4.1 percent from 160.5 million in the first quarter. Western Digital led the market with 32 percent of global unit shipments, followed closely by main rival Seagate Technology at 31 percent. Seagate, previously the shipment leader in the space, has been unable to overcome Western Digital’s market share advantage. The rest of the HDD market in the second quarter was divided among Hitachi Global Storage Technologies at 16 percent, Toshiba/Fujitsu at 11 percent and Samsung Electronics Co. Ltd at 10 percent.

“Despite some disruptions resulting from the Japan quake disaster in March and the continuing decline of netbook sales because of tablet devices, HDD shipments rose during the second quarter, with each hard drive maker meeting its revenue forecast,” said Fang Zhang, analyst for storage systems at IHS. “Growth was achieved partially from a pull-in of orders by PC manufacturers fearing a potential shortage of components from the quake’s impact, and also by suppliers utilizing less expensive sea freight to ship goods instead of costly air freight.”

Western Digital shipped 53.8 million HDDs in the second quarter—the most ever in the company’s history—up 6 percent from the previous quarter. Revenue totaled $2.4 billion, second only to Seagate at $2.9 billion because of Seagate’s larger share in the business enterprise segment, which commands higher average selling prices.

Despite the record shipments, Western Digital suffered margin erosion, with its non-Generally Accepted Accounting Principles (GAAP) operating margin at 6.4 percent in the second quarter, caused by a number of factors including a broader pricing decline, increased investment in new products, and higher acquisition- and litigation-related expenses.

Meanwhile, runner-up Seagate during the same period shipped 52.3 million HDD units, up 7.2 percent. Like Western Digital, Seagate also suffered margin erosion with a slightly lower non-GAAP operating margin of 4.4 percent, attributed to higher commodity prices, increased competition, the lower margin of notebook disk drives and slower technology transitions. Another factor that may be impacting Seagate’s margin is the recall of some of its 1-terabyte mobile drives, produced in July for the 21.5-inch and 27-inch iMacs from Apple Inc.

Moving forward, HDD shipments in the third quarter will rise 3.4 percent because of anticipated sales increases during the back-to-school and pre-holiday season on the consumer front, as well as continued corporate PC upgrades driving the enterprise segment. In particular, the enterprise space will remain strong due to new microprocessors such as Sandy Bridge and Romley from Intel Corp., and Bulldozer and Interlagos from Advanced Micro Devices Inc. The adoption of these new processors by enterprise businesses, which demand higher performance for server and storage virtualization, will lift enterprise HDD demand in the second half of this year, IHS believes.

To learn more about this topic, see:

IHS iSuppli

5 comments on “Hard Disk Drive Shipments Rise 4 Percent in Second Quarter

  1. elctrnx_lyf
    September 9, 2011

    seagate and western digital are completely leading the market. This would continue for few more years till we see major breakthrough in the ssd technology.

  2. saranyatil
    September 9, 2011

    More acquisitions and merger have been taking place in this business too. I feel with Seagate – samsung tie up may have market share anything between 40 – 45% and western digital take over of Hitachi may accout >50% share with Toshiba also in this.

  3. itguyphil
    September 9, 2011

    elctrnx_lyf,

    When SSD does become the standard, wouldn't you expect those 2 vendors to still be ahead of the curve? Since they have the edge now, shouldn't these new developments be a part of their R&D cycles to stay on top?

  4. Wale Bakare
    September 10, 2011

    The adoption of these new processors by enterprise businesses, which demand higher performance for server and storage virtualization, will lift enterprise HDD demand in the second half of this year, IHS believes.

    I strongly believe in IHS about HDD market demand. Another sector that might increase the demand, IP Camera for indoor and outdoor security experiencing gradual market demand in one of Africa countries. At present, my firm is working with  a consortium of upcoming high -tech organizations in the region deploying IP Camera using cloud infrastructure as storage.

  5. t.alex
    September 25, 2011

    Cloud is the strong drive for HDD usage, while notebooks and tablets are moving towards SSD.

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