The coming crisis in disk drives

by Robin Harris on Tuesday, 16 October, 2012

The flooding-induced disk drive drought is over, except for some channel filling, but the last year’s drive vendor profitability may be the last good news they see for years. Trends are conspiring against disk drive vendors.

1st, worldwide PC sales are slowing and are projected to fall for the 1st time in 11 years. PCs are the largest single market for disk drives.

It would be OK if PCs were being replaced by devices with hard drives, but they aren’t. Mobile phones and tablets are replacing PCs for casual users.

2nd, the SSD market, expected to be about 40 million units this year, is taking an additional several percentage points of growth away from the disk drive. Ultrabooks and Apple’s hot selling MacBook Air are eating into the profitable mobile drive sector.

3rd, the driver shortage may have affected consumer behavior for the long-term. People who never thought about their capacity use and need were suddenly forced to consider it. And many found they were buying much more capacity than they needed.

While speculative, this is not unlike the 1973 Arab oil embargo, where many drivers decided against cars getting 10 miles to the gallon.

Market dislocations always force reconsideration of habits and assumptions. The only issue is how long the changes last.

Bright spots
The trends are not all grim. Cloud providers are buying millions of disk drives. Windows 8 is poised to provide some pop for the PC market. The growing consumer embrace of video will continue to gobble up storage capacity.

Vendors have responded, finally, to the last by moving into the external drive market. By all accounts this is been a major success. Their margins need all the help they can get.

Finally, if Ultrabooks do take off, hybrid drives will deserve significant credit – and vendors will get the volume they need.

As disk drives go so goes storage
This isn’t just a question of overcapacity or margin pressure. The disk drive industry is facing major investments – patterned media and heat assisted magnetic recording – to take areal density to the next plateau.

The StorageMojo take
If the drive vendors cannot afford new technology we may see the end of glorious 40% annual capacity increases that disk vendors have gifted to the storage industry for decades. And that would force much greater dislocations than we’ve seen in the last year.

But slowly – glacially – the drive vendors are starting to realize that they have to go after niches they’d spurned before. Like toothpaste – now available in Extra Bright, Baking Soda, Sensitive, Gel, Mint and Original Flavor – drives need more variety.

While 7mm, hybrid, helium and external drives are a good start, there are still major market opportunities for Seagate, WD and Toshiba to address. Archive drives – shingled? – that replace LTO tapes are one option. Home media servers designed with the attention to detail that Apple specializes in are another. Cloud gateways amd Drobo-class arrays are even more.

These all share the key feature of being cheaper than the enterprise storage vendors can afford to sell, so they don’t compete with these territorial customers. But will drive vendors make the investments in software and marketing they’ll need to be successful?

If history is a reliable guide, no. But maybe desperation will lead them to overcome their inbred conservatism and surprise us all.

Courteous comments welcome, of course. I want archive-quality disk drives!

{ 3 comments… read them below or add one }

Ricardo October 18, 2012 at 11:46 am

I believe SSD will be tier 0 and 1 for a long time, they won’t make it to tier2 > untill prices hit the floor and capacity hits the roof.

Disks manufaturers will have to offer both, SSD and mechanical drives if they want to keep or grow their sales.

Rocky October 19, 2012 at 10:21 am

+1 on the archive-quality disk drives, though we need archive-quality filesystems and other OS features to go with them.

Cloud providers may be buying millions of disk drives; but they put a lot more downward pressure on prices.

Cloud providers thin provision a lot better than enterprise and SMB buyers, reducing total storage purchased as more storage moves to clouds.

The biggest cloud providers are moving further down the value chain, designing their own servers, network switches, and chips – Google is Intel’s fifth largest customer. How soon will they demand unique models of disk drives, SSDs, and tapes? More niches, but comfortable niches.

KD Mann October 26, 2012 at 3:25 pm

Robin, another great article!

You mentioned cloud providers are buying disk drives to hold the content that used to be stored on PCs, but it’s not a one-for-one ratio.

Consider: when I create content on a PC, say for example a 200MB video clip, I store it on disk locally and (presumably) I back it up on another disk, the “multiplier” is 2X.

If I put that same content in the cloud, it is replicated on MANY disks…a dozen or more on (for example) YouTube. Same goes for photos on Flikr, doc files on Google docs, Skydrive etc.

The massive redundancy that underlies all Cloud architecture…the ‘cloud multiplier effect’ if you will…is truly the ‘silver lining’ for HDD makers.

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