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Hitachi eyes healthy future for hard drives

Posted: 13 Feb 2008 ?? ?Print Version ?Bookmark and Share

Keywords:hard disk drive? HDD market rebound? solid-state drives? hybrid drives?

Chu: We are optimistic about the prospects in the [HDD] market and we eye very strong growth, particularly in Asia's emerging markets.

The hard times for hard drives are over.

Overcoming stiff price wars and competitive upheavals from alternative storage technologies, the HDD industry continues to rebound with renewed optimism. Analysts agree that the market is now on firmer ground. Since the transition to perpendicular magnetic recording, business conditions for HDDs are turning in for the better; iSuppli reported Q3 07 shipments hit 138 million units, up 19 percent from Q2. iSuppli also forecast HDD revenues total about $9.3 billion in Q4. Market research firm Trendfocus added that the HDD sector will continue flourishing and will top $33 billion in 2011.

This bodes well for hard drive makers such as Hitachi Global Technologies (Hitachi GST). Last year, the HDD maker had a steady growth driven by an active pipeline of products and technologies including the industry-milestone terabyte drive.

"This is a great time to be in the hard drive industry," notes Robert Chu, VP of Asia Pacific Hitachi Global Storage Technologies in an interview with EE Times-Asia. "We are optimistic about the prospects in the market and we eye very strong growth, particularly in Asia's emerging markets."

Despite the looming U.S. economic recession, Chu said they have not seen its impact in the HDD business as they achieved satisfactory market performance as well as demand from key channel partners and OEM customers. In Q4 07, the company shipped 25.4 million units, up 24 percent y-on-y.

Stable growth
What fuels the optimistic outlook for the sector?

Consumer electronics composed of DVRs, camcorders, STBs, multimedia systems, home servers and external media storage will continue to propel the growth of 3.5-inch and 2.5-inch hard drive segments, Chu said. He added that staple market growth drivers, particularly desktop PCs and notebooks, will continue to generate steady demand for HDDs. In Q4 alone, Hitachi GST shipped 12.92 million units of 2.5-inch drives and 10.57 million units of 3.5-inch drives.

"The notebook refresh cycle, desktop replacement cycle, as well as first-time notebook ownership led to solid growth in the 2.5-inch business," adds Chu. "For 3.5-inch drives, we have traditional markets in Asia Pacific which will continue to thrive given the region's robust desktop sector and large markets such as China and India."

Says Chu: "The global demand for storage will remain unabated with the rise of the current phenomenonWeb2.0." Among the flurry of Web 2.0 applications such as Wikis, YouTube, MySpace and podcasts, he noted that video has become "the" Web application today, as well as voice, in the case of VoIP. Both consumer data content require high reliability and huge media capacities that HDDs can provide better than other storage technologies, Chu explained.

The increasing adoption of HDTV is another boon for the HDD sector, noted Chu. "We see very high interest in high-definition content programming as broadcasters and consumers migrate from standard analog TV to HDTV transmission. It plays well with our technology offering such as the 1Tbyte drive, which is suitable for recording HD content."

Streamlined approach
This year, traditional drives will be the company's focus. Hitachi GST has shed its 1-inch product line late last year. As for its 1.8-inch drive business, the company maintains its production line because, according to it, the form factor continues to represent a portion of the overall HDD market. It shipped 344, 000 units of 1.8-inch mobile drives in Q4 07.

"We see the 2.5-inch and 3.5-inch drives as the main growth drivers for the industry in the long term," Chu explained. "The 2.5-inch drives will drive more growth than the 3.5-inch HDDs for reasons mentioned earlier. Hence, we are investing our efforts, development and product plans for the larger drive markets of IT, consumer electronics and enterprise systems."

Chu mentioned several reasons why traditional drives will not run out of steam in driving growth for the market. He said that compared with alternative PC media storage, traditional drives are more than adequate in addressing PC system requirements, say of the MS Windows Vista OS, which was the catalyst for hybrid drives. He noted that the company is watching the market for hybrid drives but feedback from customers and partners point that hybrid drives "are not a compelling requirement today" and that traditional drives still provide better cost-performance ratio than them.

Chu added that the lower price points, performance and level of security offered by traditional hard drives are also better than solid-state drives (SSDs), which are still in its nascent stage of development. "Traditional drives, particularly the bulk-data encryption in our drives, provide global data security that SSDs don't have," he said.

What about power consumption?

Answers Chu: "Our development teams are always looking for ways to lower power consumption in the system. We consider the 'green' initiative and achieving low power consumption very important." According to him, the Hitachi GST DeskStar E7K500 drive offers the industry's lowest power consumption among all hard drives, a 40 percent improvement vs. previous-generation drives. He added that their drives also incorporate advanced power management, which started six generations ago with the DeskStar 120 device.

Eye on Asia
Asia will continue to play a significant role in the company's 2008 road map. Chu cited that in Q4 07, Asia Pacific accounted for 72.4 percent of Hitachi GST's volume shipments, followed by EMEA at 16.2 percent and North America at 11.4 percent.

"China, India and the emerging markets of Southeast Asia will be our focal point for our Asia-Pacific strategy," pointed out Chu.

Underscoring this is the establishment of its technical support office in New Delhi, India. "We are looking for other major areas to cater to our partners as well as to our growing number of OEM customers in India," he said. "We are very optimistic about the prospects there, a market that is growing in excess of 20 percent in CAGR over the last four years."

He attributed India's robust growth to be driven primarily by the traditional sectors of PC desktops as well as consumer and commercial notebooks. The company also eyes strong growth in India's consumer electronics, especially OEM STBs, video-on-demand systems, cable boxes and DVRs. Adding to this is India's large movie production industry, which offers attractive opportunities for the storage company.

Hitachi GST also partnered with Cradle Technologies for a series of road shows and training across India to provide designers with insights into the latest trends in the video surveillance market, particularly the shift to DVR systems.

As for China, Hitachi celebrated the 10th anniversary of its Shenzhen media facility, which shipped its 100 millionth media last year. With two other facilities in China, Chu said the company is confident about its footprint in the country and has no plans for further expansion yet.

Chu regarded the markets of Vietnam, Indonesia and Thailand as promising. In terms of expanding its presence in Vietnam, Hitachi GST is careful about jumping on the bandwagon. "We are watching very closely how our key OEM partners will establish their footprint in Vietnam and if we should make a presence there."

In January, Hitachi GST partnered with Taiwan's Asus for the launch of the world's first 1Tbyte notebook, which integrates the company's 5K500 drive. The 2.5-inch notebook drive delivers half a terabyte capacity, currently the largest in the industry. The enhanced-availability version designed for 24/7 always-on systems will be released in the second half of Q2.

- EE Times-Asia

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