Hard drive industry gets more respect
By Sam Diaz. Mercury News 9/8/03
When it comes to components that make computers do what they do, fast processors, memory and quality software get all the attention.
Hard disk drives never got much respect. That's starting to change.
Consumers are recognizing the importance of a large-capacity hard drive to store all the digital photos, music and movies they've come to love. The makers of consumer electronics products -- from video game consoles to digital video recorders to MP3 players -- are turning to the hard drive to make their products better.
Higher capacities and lower prices are making digital music and video products not only possible but affordable for the mainstream.
Hard drive makers have pushed technologies to the limits to add more capacity. They've slashed prices to gain market share. And they gobbled up competitors.
Now that only a handful of hard disk makers remain and prices are at their lowest, what's next for the hard drive industry?
The folks behind Diskcon, the 17th annual tech show for hard drives, hope to answer that question and more when the show opens its doors at the Fairmont San Jose on Tuesday morning.
``From an industry standpoint, it's kind of exciting,'' said Mark Geenen, president of Idema, the company staging the conference.
For the first time in years, hard drive makers are making money. Stock prices are up. The industry is one of the first in high-tech to rebound.
The big players finally hold control over the technological advancements and component prices because they're making their own parts -- recording heads, for example -- instead of buying from outside vendors.
In July, Western Digital outbid Seagate and Hitachi to pay $87 million for the assets of Read-Rite, which made hard drive recording heads out of its Fremont plant until it went bankrupt.
That helps level the playing field with competitors such as Seagate, which already manufactures its own recording heads.
Consolidation
The changes -- specifically consolidation -- has made the hard drive industry healthier, said Mike Cordano, executive vice president for sales and marketing at Maxtor, a Milpitas hard drive maker.
In 1985, more than 80 hard drive makers competed against one another. By the mid-90s, there were closer to 20 companies. Today, there are seven.
``It's a much more stable economic environment for the entire industry,'' Cordano said. ``And it's a healthier place for companies to exist and move into broader product lines.''
There's plenty of excitement about the move into a wider array of consumer electronics products. But that market is still a small one, representing less than 10 percent of the hard drives shipped last year.
It will grow, but for now the core customer -- the PC maker -- remains top priority.
And price isn't necessarily the driving factor.
A quality product and a company that's both flexible and responsive can gain more ground with PC makers such as Dell than a hard drive maker with the lowest price, said William Lewis, an analyst who watches the industry for J.P. Morgan in San Francisco.
``If you can give them the product they need, when they need it, you can earn their business,'' Lewis said. ``You've got to give Dell what Dell wants. They'll pay a couple of extra bucks if they can get a good drive that doesn't cause them any problems. They don't want returns.''
Price is always important but it seems that prices are already at their lowest.
In 1998, when the average capacity of a computer hard drive was 4.4 gigabytes, the average price a computer maker paid was $142. Today, the average capacity is 56 gigabytes and the average price is down to $73.
``A lot of people see that as a negative and wonder how you can compete when the prices get cheaper and cheaper,'' said Brian Dexheimer, a vice president at Seagate Technology in Scotts Valley. ``But you're looking at an industry that's going to ship 250 million units this year. There are very few types of businesses that can ship that type of volume. The key is making the cost per gigabyte less expensive. When you do that, people find ways to use it.''
Jun Naruse, chief executive of Hitachi Global Storage Technologies in San Jose and the scheduled keynote speaker at the Diskcon trade show, realizes that the processor had been the center of the IT world for a long time.
His company is the result of Hitachi buying the disk drive operations of IBM, the company that invented the technology in 1956. Naruse said that while processors can be swapped out, the data on a disk drive is precious.
Data's importance
``Data means everything. We are processing the data,'' he said. ``The processor is kind of a tool that can be replaced. We cannot replace data. Our data is more important.''
Hitachi Global is innovating new forms of storage to take drives to the next level. The Microdrive, developed by IBM, could replace tapes in camcorders and flash memory in digital cameras.
It could be the next big thing -- or not.
Paul Gilovich, a disk drive pioneer, has his own idea to push hard drive speeds to new levels. Gilovich, who worked with the original IBM engineering team in San Jose in the 1950s, said his new design will revolutionize the way a drive retrieves and delivers data to the PC.
Gilovich holds a patent for technology that puts multiple actuators -- the arms that move between the platters on the inside of a drive to ``pull'' the data -- inside the drives.
His model, equipped with four actuators, could ``grab'' data much faster than a traditional drive with one actuator, Gilovich says. Under his model, one actuator can grab a bit of data that it needs from one platter while a second actuator grabs a bit from another platter and so on.
``The disk drive today is too slow,'' he said. ``They're not fast enough for the CPU of today.''
At 73, Gilovich is hoping to launch his own disk drive company soon -- an addition to an industry that's been shrinking. This is the shake-up that the industry needs to go to the next level, he said.
``Today's platform is 48 years old,'' he said. ``I've just reconfigured it. It's going to change the whole world, as far as electronics are concerned.''
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