516 Million HDDs Shipped in 2007, a Yearly 19% Growth

2007 was a year to remember for HDDs, with shipments reaching 516 million units, up from 434 million in 2006. Factory revenue rose to $32.8 billion, up from $31.2 billion in 2006 or 5%.

Beyond strong demand growth from notebook PCs and consumer-electronics products, HDD makers benefitted from a second-half cease-fire in the price war that had dictated market conditions over the past three years.
"HDD suppliers apparently have realized that there are no major advantages to gaining a few points of share at the price of profitability," said Krishna Chander, senior analyst for storage systems at iSuppli. "Such profitability is what keeps the engine of research and development churning in this industry, and HDD makers appear to have decided they don’t want to cook the goose that lays the golden eggs."
Although the price war continued to rage in the first half of the year, the second half brought a rebound and an appreciation of the value of HDDs. Pricing was supported by the arrival of high-capacity 1Tbyte HDDs, a key milestone in the face of technology challenges from NAND flash memory.
 
Seagate still No. 1
Seagate Technology LLC maintained its lead in the global HDD market in 2007, with its share of shipments rising to 34 percent, up from 33.1 percent in 2006. The company shipped 175 million HDDs in 2007, up 22 percent from 144 million in 2006.
The attached figure presents iSuppli‚s estimate of global HDD market share in 2007. Seagate in the fourth quarter saw its gross margins rise to a solid 26 percent, up from 19.9 percent a year earlier, due to a rich mix of product offerings across all its product lines.
Second-ranked Western Digital Corp. in 2007 shipped 113 million HDDs and increased its share to 22 percent, up from 19.6 percent in 2006. The company benefitted from its foray into the enterprise secondary storage market with its premium-priced RAID edition drives.
No.-3 Hitachi Global Storage Technologies increased its share to 17.3 percent, up from 16.1 percent in 2006. Hitachi reversed its operating loss of $93 million in the fourth quarter of 2006 to achieve an operating profit of $95 million in the fourth quarter of 2007.

Despite the competitive threat posed by NAND-type flash memory in products ranging from MP3 players to notebook computers, the industry’s strong performance in 2007 indicates the HDD isn’t ready to quit any time soon.
Still, the threat of NAND is going to haunt the industry in the coming years. Only cost reductions and the continued advancement in HDD technology, driven by profit-funded research and development activities, will keep the industry afloat.

2007 WORLWIDE HDD MARKET:
MANUFACTURERS’ SHARE

iSuppli Corp.