HDD industry to return to growth after difficult 2011

In the wake of two massive and tragic natural disasters, worldwide hard disk drive (HDD) unit shipments experienced a decline of 4.5 per cent in 2011.

Although efforts to clean and repair flooded factory buildings and equipment in Thailand will take most of the first half of 2012, HDD and HDD component production is expected to return to pre-flood output levels in the second half. 

Due to the imbalance in supply and demand that resulted from the Thailand floods, HDD prices have moved higher in recent months. HDD vendors are taking advantage of this opportunity to reset prices and recover some of the excessive price erosion that began in 2009. 

IDC expects HDD revenue growth to exceed shipment growth in 2012, a precedent for the industry. Assuming the industry is successful with hybrid solid state hard drives (hybrid SSHDs), industry revenue could approach US$50 billion by 2016 with a 2011-20 compound annual growth rate of 8.6 per cent. 

“In many respects, the hard disk drive industry has collectively hit the ‘reset’ button,” said John Rydning, research vice president for HDDs at IDC. 

“A reset of the HDD industry structure should allow for the remaining HDD industry participants to slowly reduce HDD prices from current levels at a rate that still delivers value to customers, while at the same time ensuring sufficient funding is available to develop new HDD technologies that are needed to improve HDD capacity, performance, reliability, power consumption and security.

“Still, long-term revenue growth will only be realised if the remaining participants transform into storage device and storage solution suppliers with a broad range of products for a wide variety of markets.” 

One of the major themes affecting the HDD forecast is the shift in demand for HDDs in client devices.