By Dave Simpson
—Robert W. Baird & Co.'s survey of 10 large distributors, representing a total of more than $2 billion in hard disk drive (HDD) revenues, reveals a generally upbeat environment going into the first quarter of next year.
For example, in responding to a question regarding the Q4 2005/Q1 20006 outlook, 62% of the survey participants said they were "on plan" in terms of revenues, 38% were "above plan," and none of the survey participants were "below plan" in Q4. And 38% anticipated 5%+ sequential growth in Q1, while 62% anticipate flat revenues. This is in contrast to the more-typical pattern of revenue declines in the first quarter.
Among the various types of disk drives, only the enterprise segment appears soft while the mobile, consumer, and high-capacity (e.g., Serial ATA, or SATA) segments are going strong, although supply remains constrained in the mobile drive segment.
New technologies such as perpendicular recording and Serial Attached SCSI (SAS) are not expected to hit the distributor channel in volume until at least Q2 2006.
Overall, HDD pricing is relatively stable, according to 88% of the Baird survey respondents, despite some aggressive price-cutting on enterprise-level SCSI drives over the last few weeks. But most distributors expect pricing to be stable in 2006, in part due to constrained supply, and 67% of the distributors say that HDD pricing is "more rational" now than it was a year ago.
Distributors universally acknowledge a decline in revenues for parallel SCSI drives, with many distributors now selling more SATA drives than SCSI drives. SATA drives can cost 75% less than parallel SCSI drives at the distributor level.
The Baird survey covered North American and European distributors and focuses on HDD vendors Fujitsu, Hitachi, Maxtor, Seagate, Toshiba, Western Digital, and component manufacturer Hutchinson Technology. For more information, go to www.rwbaird.com