History 2003: HDD Manufacturers Dont’t Get Respect They Deserv

The IT press, not to mention the storage community, seems only to be interested in SAN, NAS and storage software these days.

Only a few years ago, it was quite a different story. The same people used to gush over a new HDD, with every new release the subject of much comment and analysis. Those days are gone, no one seems to care anymore, so much so that even drive makers are happy just to issue a modest press release with every new product announcement, and rare indeed are those willing to organize a press conference, since they know that the limited hype generated, if any, will have scarcely any impact.

Journalists, like their readers, are tired of writing and reading the same thing week in and week out: “The new disk drive offers a capacity of xMB, more recently yGB, 2x that of the previous model.”

In fact, they’re so bored with this format, they’ve given it up, particularly since these past few months, HDD capacity no longer doubles each year as it used to, but instead every 2 years.

And yet. Without HDD manufacturers, memory wouldn’t even exist in PCs. There is no intelligence if there’s no memory alongside the processor. Without HDD manufacturers, there would be no storage industry. A company like EMC wouldn’t even exist. Recall that EMC’s success was based initially on the deployment of lower-cost 5.25-inch HDDs instead of high-price mainframe disks built around larger platters.

Without HOD manufacturers, there would be no RAIDs, no SANs and no NAS configurations, not to mention storage software companies such as Veritas or its imitators.

Without HDD manufacturers, any number of new technologies would be inconceivable. The best example is the recent idea of D2D backup, which couldn’t exist if there were no high-capacity ATA and SATA drives at ridiculously low prices per gigabyte.

Without HDDs, the very idea of ILM could never have become the industry’s latest buzzword.

Without HDD makers, a majority of the latest consumer products would never have seen the light of day. Can’t live without your PVR or TiVo? Without your Apple iPod, with amazing functionality, thanks to the integration of the HDD? And that’s just the beginning. It’s only a matter of time before there’s an HDD in every kitchen, car and why not even every pocket?

A recent UC Berkeley study estimates the amount of data produced in the world in 2002 at around 5ZB (think 5 followed by 18 zeros … if you had that many pennies, you’d be a billionaire 50 million times over!). 92% of it is stored on magnetic media, primarily HDDs. Film represents 7% of the total, paper 0.01%, optical media 0.002%.

Pursuing this logic, if you took 92% of the 5EB divided by the average capacity of an HDD, for the sake of argument we’ll say 80GB, that translates into 287 million drives.

We can’t be too far off the mark, when you consider that IDC and Trendfocus estimated the number of HDDs shipped WW in 2002 at 250 and 207 million, respectively.

The success of the HDD, even if it’s one of the few remaining computer components to use mechanical, motorized parts (along with FDDs and “primitive” peripherals like the printer), is due primarily to the cutthroat competition among its manufacturers.

With the aid of Disk/Trend, we were able to calculate that there have been a total of 187 HDD manufacturers since the very first RAMAC built by IBM in 1956 (the same IBM that no longer makes the device – it sold that business to Hitachi). Today, only 7 remain, and we’re proud to list them all – they deserve that much: Fujitsu, Hitachi GST, Maxtor, Samsung, Seagate Technology, Toshiba and Western Digital. Not to mention 2 lightweights, Castlewood Systems and ExcelStor. And two more working in tiny form factors, Cornice and the RioSpring/GS-Magicstor duo.

The largest players are very large indeed. It’s easy to forget that Seagate, with its $6.5 billion in revenue, is a larger company than EMC with $5.4 billion, judging by the most recent fiscal years. And yet Seagate manufactures a device that fetches a couple hundred dollars at most, unlike EMC’s subsystems, which can run as high as $1 million per unit.

Competition has always been real and fierce. They can’t afford to cheat.

“They don’t want to go to jail,” says Mark Geenen, president of Trendfocus.

Legend has it that when 2 HDD CEOs meet, they always come with a lawyer.

This daily struggle has, believe it or not, incited certain manufacturers to seek continually to improve their product. It’s difficult to imagine the enormous R&D effort behind a lowly suspension assembly, that little bit of metal that supports the magnetic head, which in turn journeys across a rotating disk platter. Heaven and earth are moved to save a penny here or there, whether on the tiniest component in the drive assembly or on the production line. Which in turn explains the phenomenal downward pressure on prices for the devices.

Victor Perez, at one time with StorageTek, recalls: “When StorageTek launched Iceberg in 1994, the price per megabyte was $4.75, for a device that offered data compression of 3:1. Today, we speak about half a cent for SATA. 500GB in a drive is in development. We have to be very reverent towards HOD makers. We couldn’t do it without them.”

AG Edwards estimates that the price per megabyte on RAID mainframes has fallen from $.21 to $.03 in as little as 3 years, the time elapsed between 1Q00 and 2003.

HDD professionals have long put up with pathetic margins, extorted by the OEMs that account for the greatest portion of their sales.

Since the beginning of this year, however, they’ve had slightly more room to breathe. As magnetic areal density on the units begins to approach the limits of physical laws, the unrelenting race for novelty, for innovation, has begun to slow down, indicating that ROI on a new platform is now possible for a longer term, nearly a year; rather than 6 months, as was previously the case.

We’re no longer seeing prices drop by a steady 50% per year. The price per gigabyte will dip less than 10% in 2003, according to disk drive consultant Tom Coughlin.

There isn’t one technology in a position to replace the magnetic rigid HDD, currently still in longitudinal recording, although maybe as little as 2 to 3 years off from perpendicular recording.

Who today can beat the 160GB disk drive that can be had for a mere $110, end user price, or $.70 per gigabyte. Bob Peyton, an IDC analyst, calculated back in October that the average sale price of desktop HDDs, by manufacturer, for Europe, was around $47 for 20GB, $52 for 40GB and $100 for 160GB. The average price of an HDD sold by Western Digital is $65.

The only serious competition comes from flash cards, although at much lower capacities, currently less than 1GB.

What’s more, as mentioned above, new markets continue to emerge for HDD. The consumer market represented 12 million drives in 2002, or 6% of the total market, according once again to Trendfocus, which projects 7% for 2003. The market study company also projects a CAGR of 47% for this segment between 2002 and 2007.

Actually, those forecasts seem rather conservative. In this particular segment, the ideal example is the personal video recorder or PVR, so practical for the video user. It’s hardly a stretch of the imagination to dream that the disk drive could replace VHS tape recorders in the average home, and sooner than you think.

The new disk-to-disk backup market is still severely underestimated by almost all disk drive specialists. Yet the advantages are so obvious its success is guaranteed. To make D2D work, at least initially, means copying the entire primary disk to a secondary disk, then updating any changes. Doubling, in other words, the demand for disks right from the start.

The Internet is yet another source of enormous storage consumption, since data, particularly audio/video files originally stored on a website are downloaded at an incredible rate, only to find themselves on any number of HDDs. The trend toward rich media and unstructured documents is hardly going to slow the boundless hunger for HDDs.

I don’t think it would be out of place to erect a statue perhaps a modern version of the Greek discus thrower to those who made this amazing information revolution possible, yet are never shown the appreciation they justly deserve: the manufacturers of HDDs and their components.

Jean-Jacques Maleval, Editor

This article is an abstract of news published on issue 190 on October 2003 from the former paper version of Computer Data Storage Newsletter.