- The hard disk drive (HDD) market is set to shrink from $37
billion in 2012 to $33 billion in 2013 and $32 billion in
- This will be primarily driven by a shrinking PC market,
high HDD prices, falling SSD prices and tablet adoption
- Seagate and Western Digital are new entrants into the SSD
market and both focus primarily on enterprise SSD
- This can lead to a loss in HDD revenues which is not likely
to be made up by SSD revenues in the short term
Seagate Technology PLC
Western Digital Corporation
are leaders in the worldwide personal storage market with
42% and 45%
of the hard disk drive (HDD) market respectively. The HDD market is
however set to shrink by nearly 12% in 2013 due to the greater
penetration of tablets and ultrabooks that use solid state drives
(SSDs) and also because HDD prices have not fallen in spite of a
recovery in supply after the Thailand floods in 2011.
Seagate and Western Digital have some offerings in the hybrid
and SSD space, but this is mostly concentrated on the enterprise
side to make faster enterprise storage using flash arrays. Western
Digital has high capacity hybrid drives which can be used in
Ultrabooks, but falling SSD prices are making it cheaper to
manufacture Ultrabooks using SSD, thereby driving its adoption.
We examine some key trends affecting these companies and the
storage industry below.
See Our Full Analysis Of Seagate
The HDD market in 2012 was approximately $37 billion, but
according to iHS this will decline to nearly $33 billion in 2013
and fall furtherto $32 billion by 2014 driven by multiple trends in
the storage and PC market.
The Shrinking PC And Laptop Market
The laptop and PC market shrunk by nearly 8% in the last quarter
of 2012, mainly driven by lower IT spending and the rapid adoption
of tablets and smartphones. As the PC market shrinks, we expect the
sale of HDDs - the primary method of data storage in personal
computers - to suffer as well. This is further driven by the
adoption of tablets and smartphones as these devices do not use
hard drives but use solid state memory instead. As SSD prices fall,
we expect it to take market share away from HDD storage in the PC
and laptop market. SSD allows for faster data access and thin form
factors which will drive its adoption despite its higher pricing in
the long term.
All tablet computers use solid state memory chips as their
primary storage memory, and we estimate that tablet sales will
outstrip notebook and netbook sales by the end of our forecast
period. HDD memory is relatively less responsive, slower and
bulkier and is unlikely to find much application in tablet
computers. The increasing popularity of tablet computers is the
primary reason for growth in the SSD space. We estimate that tablet
sales will outstrip laptop sales by the end of our forecast period,
and this is a major trend shaping the storage industry.
HDD Prices Are Not Falling Despite Recovery In
While hybrid drives are raising the average selling price of
HDDs, the supply shock created by the Thailand floods in 2011 was
the primary reason for HDD prices to spike. While supply has
recovered, HDD prices remain high and this is another reason for
the growing adoption of SSDs. We estimate that the average selling
price for desktop and laptop HDDs in 2013 is around $46 per unit,
up from its 2011 level of $40.
We currently have a
$38.15 Trefis price estimate for Seagate
, which is in-line with its current market price.