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HDD Market Update: Steadier, Simpler Times Ahead, or More of the Same?

HDD Market Update: Steadier, Simpler Times Ahead, or More of the Same?. November 7, 2007 IDEMA Analyst Breakfast. Topics. HDD Industry Update 2007 HDD forecast, adjustments What is driving storage demand? SSD/flash: is the threat real? Conclusions. HDD Industry Update.

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HDD Market Update: Steadier, Simpler Times Ahead, or More of the Same?

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  1. HDD Market Update: Steadier, Simpler Times Ahead, or More of the Same? November 7, 2007 IDEMA Analyst Breakfast

  2. Topics • HDD Industry Update • 2007 HDD forecast, adjustments • What is driving storage demand? • SSD/flash: is the threat real? • Conclusions

  3. HDD Industry Update • 2007 shipments have tracked as expected • CE is disappointing, or is it? • SSD/flash threat growing, or is it? • Consolidation is the buzzword • Seagate/Maxtor, WD/Komag • Is there more HDD consolidation? Media? • Overall, the HDD business is normal

  4. 2007 Forecast, Adjustments • Desktop PC market as expected • Slightly stronger mobile computing demand – capacities mirroring desktop • No surprises in enterprise totals • Quicker SFF adoption, SAS rising fast • CE reevaluation • DVR/PVR solid in US, Japan, slower elsewhere • Game consoles and HDDs have hit speed bump • PMP – life expectancy?

  5. Original 2007 Forecast(February, 2007) Units (M) • Computing-driven demand throughout • CE portion – >20% in ’07 – to – 27% by ’11 • 2.5” engine for growth – notebooks! • 2.5” to surpass 3.5” by end of forecast • 1.8”-and-below weak

  6. Revised 2007 Forecast(August, 2007) Units (M) • ’07 lowered 1% - to 495+ million • CE portion – >20% in ’07 growing to 24% by ’11 • 2.5” outlook bolstered – notebook growth! • Roughly reduced each year by 3-4%, mainly in CE • <=1.8” demand changing

  7. Seasonality is Here to Stay

  8. HDD Growth – Computing Market Units (M) • Traditional PC market still growing • Mobile market surging • Average capacity growing • Mobile society STILL needs some form of PC • Desktops NOT dead

  9. HDD Growth – External Market Units (M) GB • External HDDs booming • Used in both computing, CE • <=2.5” externals gaining • Video, music content grows exponentially every year • Much higher capacity than embedded HDDs • Margins shrinking – looking more like (traditional) HDD market Source: TFI, Seagate

  10. HDD Growth – CE Market Units (M) • CE market evolving • Inflection point is going to come, but when? • DVR/PVR will be a primary market • Other applications are small……. • ……..but add up to fuel growth

  11. How to View CE After 7 Years • Hype has outpaced results – but STILL an important piece of the long-term growth outlook • PVR/DVR has been frustrating – but promise is intoxicating – for both 3.5” and 2.5” • 2.5” – gaming, AIS, MFP, now some PVR • <=1.8” – iPod and other handhelds……soon to be invisible in a flash?

  12. Consolidation • Leading HDD, component companies profitable, so which will have a strategic view? • Media market looks heavy, and incremental investment looms in 2009 • Hitachi GST is on the rumor mill, but will something actually happen? • Where else can consolidation occur?

  13. Is SSD a Legitimate Threat? • Short-term, impact not significant • Longer-term, the threat grows for small HDDs • But, there are two key assumptions • NAND flash doubling in density, halving in price annually • NAND technology sustains and then transitions easily in 2010-2011

  14. SSD vs. HDD – (Today’s) Winner Is…

  15. SSDs in the Enterprise • There is margin to accept higher costs • There is a business case to use SSDs here • Power is lower than HDD • Random IOPs 20-50 times higher than HDD • 25% cheaper than DRAM today • Costs are still not in line with segment building, but……. • ……..1 18 GB SSD can replace many 15krpm drives

  16. Conclusions • SSDs face serious obstacles • Cost • Advantages worth the premium? • Comparing SSD to 1.8” is invalid; 1.8” is niche • 2.5” is the real battleground • Low-capacity • SSD specs still in question • OEM relationships • Will PC OEMs accept price increases when flash supply is tight? • There is ZERO precedent for that with HDDs

  17. Conclusions (continued) • HOWEVER…. • HDD suppliers still have time to PLAN! • New technologies (PMR, patterned media, HAMR, etc…) will keep HDD capacities well ahead of SSD • While the capacity gap is shrinking, it is still sizable and should remain so for years • Flash-based CE devices means more HDD-based storage modules – lots of pictures/video/music • Steadier times are coming, so hang on!

  18. Thank you!

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