March 17, 2010

HDD market remains strong and stable

Converge Storage Update.

Drives with the IDE interface remain in demand.
There is little change to report in the mainstream storage market month over month. We are still seeing industry reports indicating low inventory levels across the board, with strong demand in the mobile, desktop, and server segments. However, this has had little impact on pricing since our last Market Insights update, as both the 2.5 and 3.5 inch SATA HDDs have remained unchanged. Thus, while we had previously reported that factors were moving to repeat the shortage environment that characterized Q4 in CY09, this is still not the case.

Meanwhile, we are experiencing a sharp increase in demand for HDDs with the IDE interface. This is true in both the 2.5 and 3.5 inch form factors. In last month’s Market Insights, we had first reported this trend, indicating it was a result of sustained demand coupled with decreased production as manufacturers began to end-of-life this interface. As a result, prices are on the rise. In the 80 GB through 400 GB capacity range, 3.5 inch IDE HDDs command as much as a $5-$7 premium over the same 3.5 inch SATA HDDs. The 2.5 inch IDE HDD market is behaving similarly, with a 10%-15% increase seen in open market pricing.

In conclusion, the HDD market remains strong but stable. At this time, we are less certain that the current trends will ultimately result in a shortage environment. However, it does appear that the demand will continue and that Q2 will closely reflect the first-quarter activity. Last, expect the IDE market to continue on its present course.

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