iSuppli Estimates Hard Drive Industry Will Experience 12% Decline In 2013

Subject: General Tech | February 6, 2013 - 09:14 AM |
Tagged: storage, isuppli, Hard Drive

Analytics firm IHS recently released its iSuppli Storage Space Market Brief. According to the report, 2013 does not look good for hard drive manufacturers who may see up to a 12% decline in revenues. In 2012 the hard drive industry brought in $37.1 billion, but IHS estimates only $32.7 billion in 2013. Further, revenue in 2014 is estimated at a mere $32 billion.

hard drive.jpg

In response to new hard drive technologies and pressure from solid state drives, IHS predicts hard drive selling prices will fall 7%.  Thanks to this price erosion, the report suggests that hard drive manufacturers across the board will experience declines in gross and operating profit margins. The hard drive industry will have to contend with cheaper solid state drives as well as competition within the industry. Seagate and Western Digital will continue to battle it out for market dominance with new technologies and a continued price war that will see margins becoming thinner than ever as $/GB metrics continue to fall rapidly.

Reportedly, the hard drive makers will also have to contend with smartphones and tablets (that use solid state storage) making inroads into the PC market. Sales of traditional PCs are said to be somewhat cannibalized by mobile devices, and those reduced sales will affect the hard drive component manufacturers negatively.

graph.png

On the other hand, it is not all bad news for the HDD makers. Hard drives still have per-drive capacity and $/GB on their side. Hard drives may be losing ground to SSDs, but for cheap consumer computers and large storage arrays used in the enterprise space hard drives are still the way to go. Consumer PC sales may no longer be growing rapidly, but big data is still a growing market so that will help the hard drive market.

All in all, 2013 will be beneficial for consumers as they will be getting cheaper and more-dense hard drives. This year is not looking good for the hard drive manufacturers, however.

Image of hard disk drive courtesy Walknboston via Flickr Creative Commons.

Source: IHS iSuppli