Hitachi sees consumer devices pushing storage market

Hitachi sees a bright picture for the future of its hard-disk drive business, a sizable portion of which was purchased just over a year ago from IBM, thanks to the increasing demands for physically small, high-capacity drives for use in consumer electronics equipment.

The company, which isn't the first to note the growing importance of the consumer electronics market in its future, cautioned that it doesn't believe hard-disk drives are suitable at sub-1-inch sizes and also said it won't forget the enterprise customer in the rush to populate the living room.

"The miniaturization of the hard-disk drive is fuelling consumer change," said Bill Healy, senior vice president of consumer and commercial hard-disk drives at Hitachi Global Storage Technologies Inc. (HGST), the company's hard-disk drive unit. A small number of products, such as personal video recorders, music players and digital still cameras, already feature hard-disk drives and Healy said he sees this number increasing so that the number of drives and their capacity far outpaces expansion in the office.

The executive, who was speaking at HGST's hard-disk drive manufacturing plant here west of Tokyo, said he anticipates the average user will have two or three hard-disk drives around them in their office in five years from now but as many as 15 or 20 in devices surrounding them at home.

"You will have notebook computers for all members of your family interconnected wirelessly in your home. You'll have a home server to store your video, high-definition TV recording, music, pictures and data. You will have your set-top box recorders and DVD recorders to record the television signals in each of your television sets. You'll have your PDAs, digital cameras, digital video cameras with hard-disk drives. You'll have your car out in the garage with a hard-disk drive for control of the car electronics and perhaps even the vision of each cellphone that you own will have a hard-disk drive included."

The result will be an expansion in the size of the hard-disk drive market driven largely by consumer electronics applications, according to Healy. He said the consumer electronics portion of the market in 2002 was around 5 percent and jumped to around 10 percent in 2003 and is expected to climb to 15 percent of the total market in 2004. By 2007 around half of the entire hard-disk drive market will be products for consumer applications, he said.

The impact of such demand is already being seen.

"Two years ago you would not have thought of a hard-disk drive in an MP3 music player," he said. "Apple, at the end of last year, reported 730,000 units of hard-disk drive sales for the iPod music player."

Those drives come from competitor Toshiba Corp. but Apple Computer Inc. has tapped HGST for the 1-inch hard-disk drive for its recently launched iPod Mini player, for which more than 100,000 pre-orders were received.

"The growth of this category will be very, very large. Millions of drives will be sold within this year for MP3 players but two years ago there was nothing," he said.

Still, the company is keen to reassure enterprise customers that it has not forgotten them.

"We can't forget there are other very large opportunities," he said.

For the enterprise market, HGST announced last Thursday a 300G-byte hard-disk drive with a rotation speed of 10,000 rpm (revolutions per minute). The company has already begun shipping the drives to OEM customers and they are under evaluation, it said. Aimed at use in mission-critical systems, the new drives will be available with either an Ultra 320 SCSI (Small Computer Systems Interface) or 2G bps (bits per second) Fiber Channel interface.

The company also announced plans to demonstrate its first 2.5-inch form-factor drive with serial-attached SCSI at the upcoming SAS Plugfest, which is scheduled to take place next week at the University of New Hampshire InterOperability Laboratory in Durham, New Hampshire.

Healy also sounded a conservative note on the market for hard-disk drives below the 1-inch form-factor -- a market HGST currently dominates. Earlier this year Toshiba became the first hard-disk drive maker to announce a drive with a disk platter diameter of less than 1-inch and said it expects to see the drives used in devices such as cellular telephones.

"Hitachi has looked at smaller hard-disk drives than 1-inch for some time. Our concern, and why we have not introduced a product, is first, our customers are saying the (1-inch) Micro Drive is the correct solution. Also, like everywhere, there is competition and the competition beneath the Micro Drive is flash memory and so we have to be very cautious of that with yet smaller hard drives.

"That will over time conflict or be in strong competition with flash memory, so while we may have a period of time for a small 0.85 (inch) hard drive, Hitachi's approach today is with the Micro Drive and then flash memory," he said. "The 0.85 drives will be competitively intercepted by flash memory."

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