Prices plunge in storage market
Technology advances and increased competition from Asia are driving storage costs down to record levels, a boon for consumers.
Drive makers are increasing the storage capacity at a rate of 60 percent per year even as drive prices are staying flat, according to Jim Porter, author of the report and president of DiskTrend. But as consumers enjoy more bang for their buck, storage-hogging applications are proliferating.
In 1997, the average hard drive storage capacity
Declining storage industry revenues | |||
Disk capacity | 1998 | 1999 | 2000 |
< 1GB | 98.3 | 46.1 | 31.3 |
1-2GB | 582.4 | 99.3 | 34.5 |
2-3GB | 5,082.5 | 1,435.3 | 344.4 |
3-5GB | 11,970.1 | 6,260.1 | 1,822.5 |
5-10GB | 11,283.4 | 14,468.4 | 8,201.5 |
10-20GB | 4,114.4 | 11,928.3 | 16,735.4 |
20-40GB | 241.9 | 1,675.4 | 9,236.1 |
Figures in millions of dollars. |
Yet there is no dearth of applications to fill up all the storage capacity. Porter pointed to the new Windows 98 operating system and growing applications for the Internet as potential drive hogs. "Software gets sloppier all the time--it takes hundreds of megabytes just to load Windows 98. The number of applications people use increases all the time, and they all use a tremendous amount of disk capacity."
Hard drive shipments worldwide are predicted to rise by 16.9 percent in 1998 to 152.6 million drives, while sales revenues are expected to rise by only 7.9 percent, accounting for tightened profits among the major drive makers.
Storage prices have also been impacted by increased competition from Asian makers like Fujitsu, Maxtor, and Samsung, which have been quicker than American companies to adapt to the rapid product cycles of the storage market. Non-U.S. storage makers accounted for 22.7 percent of worldwide drive revenues, a figure which is projected to rise to 30 percent by 2001.
"The key development in the industry this year is the increased level of competition that's been forced by the Asian companies, who have increased their level of production capacity," Porter said. U.S. companies like Seagate, Western Digital, and Quantum have been slower to respond to industry changes over the last year, he added.