Hard Drive Market Goes Soft in ’09

Hard Drive Market Goes Soft in ’09

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Hard disk drive shipments during last year’s fourth quarter declined about 19 percent from the third quarter, an unprecedented quarterly drop. As a result, total HDD units shipped in 2008 only increased by about 7.8 percent from 2007. Total HDD shipments for 2008 were about 540 million units, according to the Digital Storage Technology Newsletter by Coughlin Associates.

Unfortunately, economic conditions leading to the collapse in demand for HDDs, and almost everything else, appear to be deepening this year.  PCs (desktop and laptop) are the biggest users of HDDs and there are reasonable projections that total PCs will decline by at least five percent this year. Consumer electronics products that use flash are expected to decline by seven percent or more in 2009.  In general digital storage device demand will suffer with demand for the products that use them.

 “There is more downside than upside ahead and as a consequence, HDD unit shipments in 2009 will experience their worst year over year decline ever,” Coughlin said, adding that total HDDs shipped in 2009 could be about the same as in 2007, about 500 million units.  The decline in HDD revenue year over year could be much worse depending upon how well HDD companies can control costs and inventories, he said.

Long term, digital storage device demand will recover.  Actual storage needs continue to grow and as a consequence, a lack of growth this year will lead to significant disk drive unit growth when the economy recovers.  It is expected that there will be positive growth in 2010, year over year, and that with a recovery, 2011 could see annual unit growth much greater than the average, perhaps even 20 percent or higher, like in 2003.

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