Westin Hotel, Santa Clara -- In a dinner briefing here, financial analyst Harry Blount of Lehman Brothers told the International Disk Drive Equipment and Materials Association (IDEMA) that digital consumer electronics will be the primary driver for the disk drive industry for the next few years. Cable companies like Comcast have a strong interest in seeing that set top boxes come equipped with media storage devices, he said, and because of their experience with storage, companies like Apple, Dell and HP will begin superseding companies like Sony as purveyors of home entertainment equipment.
What's more, said Blount, the consumer drives will not be immediately subject to the price erosions affecting other HHD applications. Thus, the storage industry can anticipate a 38 percent increase in the number of drives shipped (from 305 million in 2005 to over 400 million in 2005) and -- for the first time in years -- an 18 percent increase in revenues.
"The cable companies want to put PVRs [personal video recorders, like the TiVo] into your home," Blount insisted. "A half-terabyte on your home network is not out of the question." In terms of an immediate growth opportunity for the disk drive industry, "this is it!"
HDD volumes in the enterprise hardware space are likely to grow only 5 or 6 percent over the next three years, he explained. Notebook computers will likely grow 12-13 percent, while the addressable market for digital home appliances will likely double (from $80 billion to $160 billion) in the same time frame. Microdrives in cellular handsets, predicted by many to be a large growth area, are bridled by skepticism about reliability from purchasers like Nokia (since cell phones are dropped far more frequently than portable computers). But the digital home represents a clear growth path, Blount maintained.
Free from IT
As long as the disk drive industry hung on the coattails of the IT industry, Blount mapped a trend, the use of HDDs was contingent on capital spending for computers and operating systems. As long as data storage was attached to mainframes, for example, IBM was both the dominant hardware and operating system supplier. When the computing industry switched to the client-server model, Sun Microsystems became a dominant hardware supplier and Unix became a dominant operating system. With the PC revolution, storage was widely distributed, Blount explained, and Microsoft was the operating system supplier.
Currently the IT industry is in turmoil, said Blount (with IBM and HP busily "repatriating capital"). We're entering an era of "liquid data," he said, in which there are no computers — save for the cell phones and PDAs everyone carries — and no operating system. People will plug into distributed data sources as needed.
"It's a 'network', not a 'box',' Blount told IDEMA delegates, "and you've got to be thinking about building your drives differently." The consumer space will demand different head-track data access capabilities, a greater degree of interoperability and ease-of-use, Blount said.
"Where (and how) data is stored will be the 'trump card' in determining whether the digital home network will be PC-centric or consumer-centric," he said. Microsoft may not succeed in this space because of its reputation as a tyrant among PC users, and even a Samsung may still be something of a "dark horse." Despite its failings in the enterprise space, HP — with its storage-savvy printers and cameras — is extremely well-positioned to compete with Sony for consumer affections, Blount said.