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!