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Seagate poised for CE push

As the consumer electronics market urges drive prices up, company identifies digital television and cell phones as areas for growth.

Storage device maker Seagate is looking at making hard drives for digital televisions and cell phones starting in 2008.

During the company's analyst day in New York, executives outlined their strategy to move beyond the company's PC bread and butter to supply about 51 million hard drives for digital televisions and 89 million smaller devices for cell phones by 2008. Seagate said it recognized the competitive threat coming from less-expensive flash memory, but believes hard drives have plenty of room to grow as they move toward holding more data.

Besides PCs, hard drives are commonly used in consumer products such as MP3 players, digital video recorders and game consoles.

Because of the rise in sales in consumer electronics, company executives said they expect the hard-drive industry to climb at least 20 percent every year for the next three years. Thanks to the consumer electronics market, in fact, hard-drive makers experienced a nice surprise in the first quarter of this year when the average price of their products went up. Seagate, for its part, saw the average selling price of its drives rise to $79 in the first quarter, up $3 from the previous quarter, according to research company iSuppli.

Seagate also talked about having 1-inch hard drives ready in about two years that could hold between 15GB and 20GB of data. Last week, the company announced an 8GB 1-inch drive. Analysts with Merrill Lynch said the company would probably not be able to ship enough 1-inch hard disks to meet their original estimate and now predict Seagate will ship about 2.3 million drives.

Last week, Seagate also revealed its 160GB hard drive using perpendicular recording. The emerging technology, which uses magnetism to stand the bits on end and create more recording space, will eventually supplant the industry's standard longitudinal recording method. The result could be a 2.5-inch drive that holds 1.5 terabytes of data.

Financial analysts are looking at Seagate's progress after it encountered a string of financial setbacks last year.