Market Watch

Tablets to Eat Into Hard Disk Drive Shipments in Q1


Slowdown predicted as demand weakens for netbooks in favor of tablets
Rising sales of tablet devices coming at the expense of conventional netbook PCs will contribute to a low single-digit decline in shipments of hard disk drives (HDDs) in the rst quarter, according to new IHS iSuppli research.

HDD shipments in the first quarter of 2011 are anticipated to reach 160.9 million units, down approximately 4 percent from 167.5 million in the fourth quarter of 2010.

Tablets like Apple Inc.’s iPad represent a major threat to HDD demand. Among the various computing segments in which HDDs are used, the netbook—with lower computing capabilities than either a desktop or laptop—is considered the most vulnerable to being supplanted by tablets, which do not use hard disks as storage media. And as tablet adoption gains momentum, netbooks will suffer even greater declines, IHS believes.

However, the contraction in HDD shipments is not entirely due to the impact of tablets.

Declines will occur in four of the six major segments driving demand for hard disks, including desktop PCs, notebook PCs, netbook PCs and nontraditional/consumer electronics, pulling overall figures down despite slight HDD increases in the enterprise business and entry server segments.

 Hard Disk Drive Forecast

Furthermore, the first quarter of every year is a slow time, and an oversupply of some 6 million to 8 million drives at the end of the quarter last year is prompting excess inventory burn-off at present.

Companies Continue to Duke it Out
For the fourth consecutive quarter, Western Digital Corp. held off main rival Seagate Technology in HDD shipments to claim the top spot at the end of 2010. Western Digital shipped 52.2 million HDD units, compared to

48.9 million for Seagate, whose distribution channel in the Asia-Pacific region weakened during the last few weeks in the fourth quarter last year. Holding at third place was Hitachi Global Storage Technology, which took some market share away from Seagate with shipments totaling 30.3 million units.

Both Western Digital and Seagate saw prices erode in the fourth quarter, believed to result from PC manufacturers delaying orders because of excess inventory.

Given that shipments are projected to decline in the first quarter this year, pricing is likely to ease further as HDD manufacturers recalibrate their options for 2011, IHS predicts.

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