January 13, 2010

Expect continued progressive demand and relatively stable pricing in the near term

Converge Storage Update.

Positive signals and demand drive market.
Heading into the December holidays, the market was experiencing shortages in higher-capacity 3.5" HDDs, especially the 1TB capacity, as well as strong demand for 2.5" SATA HDDs on a price-point-variance basis. At that time it was speculated that these trends would continue into the midway point of Q1 CY10. As we emerge from nearly two weeks of holiday downtime, we don't have specific data to confirm or deny this speculation. Further, we have yet to pinpoint concrete open-market pricing for the HDD range in question. There was activity during this downtime, especially in the ID space. However, we don't feel that the pricing and volume data necessarily translates to the January time period.

A broader look at the market suggests the trend will continue. The majority of analyst reports that we reviewed are predicting double-digit PC growth rate (10-15%) in 2010. Several factors are believed to contribute to this, including a recovering economy, falling unit prices, increased IT spending projections and operating system upgrades. These factors translate to a positive outlook in both the 2.5" and 3.5" markets. Seagate and Western Digital appear to be the favorites to capitalize during this period, as both manufacturers have product offerings for the PC (mobile and desktop) and storage system space. Additionally, each possesses a bridge product between the relatively slower SATA drives and the emerging SSDs. But don't look for a significant transition to solid-state drives until there is more widespread availability of directly compatible motherboards.

In the near term, we expect continued progressive demand through the emerging capacities, speeds and cache sizes in all major form factors. Generally, pricing is expected to be relatively stable based on projected market growth. Lastly, continuation of the shortage environment in the 3.5" space will depend on major manufacturers retreating from their conservative production approach in 2009. However, we expect them to be tentative early on.

Share this blog post:

No comments:

Post a Comment