2008 hard disk drive shipments down in Q4 2008 and 2009 unit shipments expected to decline. Possible upside in 2010 with larger opportunity in 2011.
Fourth quarter 2008 hard disk drive shipments declined about 19% from the third quarter of 2008 (an unprecedented Q3 to Q4 drop) and as a result total HDD units shipped in 2008 only increased by about 7.8% from 2007. According to the just released quarterly Digital Storage Technology Newsletter (Coughlin Associates, www.tomcoughlin.com), total HDD shipments for 2008 were about 540 million units.
Unfortunately, economic conditions leading to the collapse in demand for HDDs, and almost everything else, appear to be deepening in 2009. PCs (desktop and laptop) are the biggest users of HDDs and there are reasonable projections that total PCs will decline by at least 5% in 2009. Consumer electronics products that use flash are expected to decline by 7% or more in 2009 over 2008. In general digital storage device demand will suffer with demand for the products that use them.
Tom Coughlin, principal analyst at Coughlin Associates writes that "there is more downside than upside ahead and as a consequence, HDD unit shipments in 2009 will experience their worst year over year decline ever. The total decline in HDD units in 2009 over 2008 will be between 5% and 9% with a decline of 7% being likely." Total HDDs shipped in 2009 could be about the same as in 2007, about 500 million units. The decline in HDD revenue year over year could be much worse depending upon how well HDD companies can control costs and inventories.
Long term, digital storage device demand will recover. Actual storage needs continue to grow and as a consequence, a lack of growth this year will lead to significant disk drive unit growth when the economy recovers. It is expected that there will be positive growth in 2010, year over year, and that with a recovery, 2011 could see annual unit growth much greater than the average, perhaps even 20% or higher (like in 2003).
Coughlin Associates provides market and technology reports, organizes conferences focused on digital storage and applications (the annual Storage Visions Conference just before the International CES and the Creative Storage Conference just before the NAB show). The company also provides technical and other consulting services. For more information on Coughlin Associates and its products or to get your own subscription to the quarterly Digital Storage Technology Newsletter (with membership in the Entertainment Storage Alliance, www.entertainmentstorage.org) visit www.tomcoughlin.com or call us at 408 -871 -8808.