The hard drive market summed up by Col. Nathan R. Jessep

Friday rant…maybe I’m being over-sensitive here, but…

…it  seems that all I read about is this infatuation with the pending demise of the hard drive industry. The latest headline: “Smartphones outsell PC’s for the first time ever” …so what? I have been using the same PC since 2005, and since then have replaced my smartphone 3 times (Blackberry, then iPhone, then iPhone 3, and I will be replacing it again when iPhone 5 comes out). At the same time, the other story has been tablets, and over the next few years – “Who needs PCs? Growth slips as tablet demand explodes” – everyone will be walking around with tablets, no one will need a PC?  So, who will need a hard drive?

First of all, the PC segment, granted is the largest, but it’s not the only segment of the hard drive industry.  Sure, it appears to be shrinking.  According to some analysts, demand for new PCs in only expected to grow 8% this year, not 9%, and 7% in 2012 not 8%.  Ouch – a whole 1% per year, and we’re talking units here.  My question is where is that 1% drop per year in demand?  I would argue it’s on the low end of the PC price spectrum. PC’s with 160GB, 250GB, even 320GB hard drives in them – the basic PC used in the home, or the office. ..big deal…who wants that low price, low margin business anyway? (insert sarcasm)

I say the real story is capacity.  At the same time we hear about the pending doom of hard drive companies, with the glorious ascension of the smartphone and the tablet, it’s capacity that ultimately determines the longevity of the hard drive, and there is no sign of a capacity shrinkage problem.

• “HDD Makers Will Deliver Unprecedented Capacity in Next Five Years, IDC Reports – A prominent IT researcher forecast  May 3 that the hard-disk storage industry will be building and selling products at an unprecedented pace during the next five years. In fact, the world hard drive industry is predicted to deliver more than 300,000 petabytes of storage capacity through 2015 — mostly to enterprise data centers and cloud computing systems, IDC reported.”
• “Storage Growth Spurs Demand for IT Pros, Certifications – Nine out of 10 organizations expect their data storage capacity to increase by at least 10 percent in the next two years, according to a September 2010 CompTIA survey. And one-third of organizations expect their data storage capacity to double in that same timeframe.”
• “Digital data created in 2020 forecasted at 35 zettabytes; cloud computing will manage data growth – the worldwide volume of digital data grew by 62% between 2008 and 2009 to nearly 800,000 petabytes (PB). IDC claims this ‘Digital Universe’ will grow to 1.2 million PB, or 1.2 zettabytes (ZB) in 2010 and reach 35 ZB by 2020.”
• “EMC Fourth-Quarter Profit Rises 61% on Storage Demand – Companies are spending more on information technology and investing in new storage computers to hold the increasing amounts of data and manage disaster recovery, according to Daniel Ives, an analyst at FBR Capital Markets.”

I could go on, but will spare you my obviously slanted opinion…

The bottom line is that even though smartphones may out sell PCs, and tablets are cutting into PC demand, there is nothing that says, “Consumers and businesses’ demand for storage capacity to decrease by 2020.”  Now that would be shocking! So buy your tablets, and replace that smartphone every time something better comes out (I’m right there with ya), because hard drive guys will be there when you want to store and consume gazillions of gigabytes from the cloud, or some data center, or your home…

To quote Col. Nathan R. Jessep (A Few Good Men), “We (I) have a greater responsibility than you can possibly fathom…you want us (me) on that wall, you need us (me) on that wall”

(By the way, check out Wolfgang Gruener’s post “240 Million Tablets: The Gazillion Dollar Forecast Game” -a good read)

out.

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