Report: Hard drive shipments slumping

Computerworld - Worldwide shipments of hard disk drives (HDD) used in PCs and other consumer electronics gear will be flat or could even decline in the fourth quarter of 2008 compared to last quarter, according to iSuppli Corp.

At the same time, iSuppli is estimating that solid state disk (SSD) drives shipped over the next year will leap 6x from 3.2 million this year to about 18.9 million next year and will produce $1.4 billion in revenue in 2009 compared to $163 million this year. By 2012, iSupply is estimating SSD sales will produce $9.3 billion in revenue from 88.6 million units shipped.

ISuppli's "pessimistic outlook" for hard drive shipments estimates that as few as 149.4 million units will go out during the current quarter, a 10% sequential drop. ISuppli's more optimistic outlook calls for global HDD shipments of 157.5 million units in the quarter ending Dec. 31, basically flat compared to the 158.3 million units shipped in the third quarter. If that forecast holds true, overall HDD shipments for 2008 would total 593.2 million units, up 14.9% compared to the 516.2 million units shipped in 2007, iSuppli said.

Krishna Chander, a storage analyst at iSuppli, said her company considers the optimistic sales forecast more accurate because it is in line with sales predictions from leading hard drive makers, such as Seagate Technology LLC and Western Digital Corp. (WDC). Seagate in October predicted the HDD industry would ship 156 million units in the fourth quarter; WDC's outlook, when extrapolated, amounts to about 161.7 million.

"OEMs that traditionally purchase more components in the fourth quarter are reducing their procurement budgets or are buying with low incoming inventory -- resulting in reduced pricing for HDDs," Chander said.

In September, iSuppli forecast HDD shipments would rise 4.9% sequentially in the fourth quarter and 16.6% for all of 2008. Next year will bring even greater uncertainty, according to iSuppli. HDD unit sales growth is predicted to range from 4.3% to 6.8% above 2008 levels.

The average selling price of an HDD is also expected to drop sharply next year, iSuppli stated. HDDs are expected to sell for about $58 in the second quarter of 2009 before recovering to the near $60 range late in the fourth quarter. Those prices reflect an average of all HDDs regardless of size. "This weak pricing represents a drag on the HDD industry as a whole, one that will make it harder to cut a profit," iSuppli stated.