Drive makers face stiff competition
Facing increasing pressure to deliver higher-capacity drives at competitive prices, disk-drive manufacturers reported a combined revenue loss of 5.2% last year, despite an overall 16.1% gain in unit shipments, says Jim Porter, president of Disk/Trend Inc., a storage market research firm in Mountain View, CA.
In 1998, the average cost per megabyte for a disk drive was 4.3 cents, compared to $11.54 in 1988. Porter expects the average price to drop to as little as 0.3 cents per megabyte by 2002.
While almost 75% of all disk drives shipped this year will be desktop devices, the mobile and server markets will post higher growth rates. Porter pegs desktop drive growth at about 15% this year, bringing shipments to 125.6 million units.
The mobile and server drive markets are both expected to grow at more than 17% this year, amounting to about 21 million units each. In terms of overall drive shipments, mobile units currently account for just 12.3%, while server devices account for 12.7%, according to the 1999 Disk/Trend Rigid Disk Drive report.
Porter attributes the surge in server units to recent storage area network (SAN) activity and to increasing demand for servers in all network areas. In mobile markets, the swell in unit shipments primarily reflects expectations for notebook shipments, although esoteric applications, such as specialized mobile equipment, are also factored into the up-tick.
In the market share race, Seagate (20.5%), Quantum (17.3%), and Western Digital (13.5%) clung onto the top three spots last year for non-captive drive shipments. But IBM (12.5%), Fujitsu (11.8%), Maxtor (11.6%), and Samsung Electronics (5.9%) were close on their heels.
"The second-tier companies all made major gains in market share last year, while the top-tier players all lost share," says Porter. Most notably, Maxtor doubled its 1997 shipments. And Porter expects Western Digital to give up its #3 spot to Fujitsu, IBM, or Maxtor this year.
Adding to the competitive landscape is startup Conner Technologies Inc. (CTI), led by Finis Conner, former head of Seagate Technology and the late Conner Peripherals. CTI will compete on the low end with 4GB and 8GB 3.5-inch drives. Manufacturing will be done on a contract basis in China.
Meanwhile, Seagate continues to gain a foothold in the low-end arena, specifically the $500 PC space, with its recently announced 4.3GB U4 drive. "In the last two months, the U4 has become the big factor in the low end," says Porter. "It`s a single-platter, two-head, minimum-parts-count drive, designed with the lightest possible manufacturing tolerances so there`s minimal rework at the end of the production line."
The drive goes for about $85. However, Porter expects Seagate to see significant competition in this space by the end of the summer.
In higher-end markets, manufacturers continue to release products at a frenzied pace. "There`s no stopping the upward movement in capacities," according to the Disk/Trend report. "In 1999, leadership has already moved up to the 5GB to 10GB group, with 40GB to 80GB drives forecast to be 2002`s leading product group."
Seagate and IBM, for example, last month both unveiled higher-capacity, higher-performing drives. Seagate`s 7,200rpm Barracuda ATA disk drive family provides up to 28GB of capacity on four 7.1GB platters, while IBM`s 5,400rpm Deskstar drive boasts an industry-high 37.5GB on five platters. A 7,200rpm 34GB Deskstar product is also available.
"While most drive manufacturers have 20GB to 27GB, IBM is taking it up to 37.5GB, continuing their pattern of running six months ahead of the pack in getting high-end products in production," says Porter.
The IBM drives are priced at $420; Seagate`s 28GB Barracuda drive lists for $339.