Handheld devices, such as personal digital assistants and cellphones, will drive the hard disc drive (HDD) market in the near future, making the PC hard drive market segment "look like small fry", says Western Digital`s sales director for SA and Israel.
Ken Larson believes that, with the imminent release of a one-inch hard drive by Western Digital, the world`s number two HDD producer, and similar products from its rivals, hard drives will become solidly entrenched in the handheld-devices market.
However, he notes, flash (USB) drive manufacturers are also keen to make a play for a portion of this market, as demonstrated by Apple`s recently-launched iPod Nano, which comes with either a 2Gb or 4Gb flash drive.
But HDD producers are set to respond with the introduction of the one-inch hard drive within the next month or two, which will offer 5Gb and 6Gb of capacity, says Larson.
Battle is on
"So the battle is on. But in terms of price per megabit, the hard drive industry, I believe, will win," he adds.
Larson believes the global HDD industry has almost seen the end of consolidation among its players, and the sector, which consisted of about 70 companies two decades ago, has been whittled down to seven. This number will drop to six later this year, when Seagate, the world`s biggest HDD manufacturer, completes the acquisition of world number three Maxtor.
"The industry is now consolidated as much as it will be," Larson comments, adding that there is sufficient growth and opportunity in the global market to keep the remaining companies successful and profitable.
Consolidation, he says, was driven mainly by a lack of profitability and low margins, prompting even IBM to sell its HDD business for $2 billion to Japanese company Hitachi, which predicted that the consumer electronics market would eventually "explode".
Longer lifecycle
Today, hard drive companies are also aided by longer product lifecycles, says Larson, explaining that manufacturers are no longer so pressured by the tremendous pace of technological development.
"Now, for instance, a 400Gb hard drive product line stays alive for much longer. There may take as long as three years before an 800Gb hard drive is introduced."
The industry predicts strong future growth, Larson points out, saying it is expected that 455 million hard drive units will be manufactured in 2007, generating revenue of about $27.4 billion.
The South African market, he says, still offers many opportunities for hard drive manufacturers, as it is still an emerging market. Western Digital holds 20% of local market share, which is below its worldwide average of 27%. Locally, 800 000 HDD units were sold last year.
Larson says the company plans to embark on a focused marketing drive in SA to achieve a 30% market share by the end of the year.
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