Hard-Drives to Gather Money on Silicon Platters

The hard-disk industry has returned to profitability in the third quarter of the last year, as the storage market has finally landed on firm ground. Research company iSuppli recently issued a report about the situation on the hard-disk storage market.

The industry managed to ship about 138 million units in the third quarter of 2007 alone. This is a significant boost in sales as compared to the second quarter of the same year, when only 115 million drives had been shipped. The income surely was consistent with the sales and the total revenues in the industry reached $8.8 billion, up 22.2% from the second quarter.

"The HDD industry as a whole returned to profitability in the third quarter, marking the first time the business has been in the black since December 2006," said Krishna Chander, senior analyst for storage systems at iSuppli.

The lions's share in the business was taken by leader hard-disk driver Seagate, that reported a gross margin of 24.6% in the third quarter, from the previous 21.6%. The second major player is Western Digital Corporation that reported a gross margin of 18.4%, Hitachi GST, could only narrow its losses to US$58 million, down from US$174 million in the second quarter, and expects $9 million in profits for the fourth quarter.

According to Chandler, "The revival of HDD profits is being driven partly by the consumer-electronics market. Shipments to consumer-electronics applications represented 17% of the total HDD market in the third quarter, up from 15.5% in the second quarter. iSuppli expects this to continue to grow to 22% by the third quarter of 2008. The rising adoption of high definition television (HDTV) is spurring demand for higher-capacity HDDs for digital video recorders (DVRs), helping to propel consumer electronics sales."

The traditional disk drives with spinning platters sell best, despite the arrival of NAND flash-based solid-state drives. iSuppli estimates that the fourth quarter revenues in the industry will be situated around $9.3 billion.