Global Disk-Drive Market Is Expected to Grow in '99
Dow Jones Newswires
SINGAPORE -- The market for hard-disk drives is expected to grow 15% to 17% to about 160 million units world-wide in 1999, after sluggish performance in 1997 and 1998, industry analysts said at a two-day conference that began in Singapore Wednesday.
In a presentation to the Asia Computer Storage Conference, organized by U.S.-based International Disk Drive Equipment and Materials Association (Idema), TrendFocus Inc. executive John Donovan said the "hard disk drive industry will grow and prosper in the long run," but there needs to be more patience.
The U.S. research firm expects shipments to grow 17% to 168 million units in 1999.
In another presentation, U.S. investment bank BT Alex.Brown Vice President Michael Carboy said he believed that the "down cycle was over and recovery underway." Forecasting a 15% growth in disk-drive shipments in 1999, Mr. Carboy emphasized that, unlike the past, he "believed the disk-drive industry was poised for disciplined growth."
The global disk-drive industry is slowly emerging out of its worst bloodbath in the past decade. The downturn has led to the closure of companies, massive retrenchments among exiting players, cutbacks in production capacity and the firing of some senior officials.
Singapore accounts for 45% of the world's supply of drives. Almost all major disk-drive makers have operations in Singapore.
The recovery of the disk-drive industry will come on the back of the growth in the personal computer market, fewer players and realistic expectations by management, said Mr. Donovan.
"The disk-drive market continues to follow a pattern of growth, increasing diversification, short product life cycles and intense competition," U.S.-based Disk/Trend Inc. executive James Porter said at the conference.
He said the desktop, mobile and server segments for hard disk drives are continuing to grow with new opportunities emerging for desktop drives in new consumer electronic applications.
Looking further ahead, BT Alex.Brown forecasts an average growth of 9.2% in revenues from the global hard disk drive industry between now and 2002, Mr. Carboy said. But he warned that it's unlikely that the industry will register a full recovery in gross margins to levels before the disk-drive maker slump.
Gross margins averaged as high as 22% in late 1997, just before the market collapsed.
Healthy growth in the global PC market coupled with organizations addressing the millennium bug issue will boost recovery in the disk drive industry. However, the flip side is that with product life cycles becoming shorter and companies minimizing inventories as much as possible, supply and demand will be on a razor's edge, he said.
Turning to the optical drive market, Disk/Trend's Mr. Porter said DVD-ROM drives will become a major phenomenon next year, after registering the first significant rise in shipments in 1998. "CD-ROM drive shipments are expected to peak in 1999 with DVD-ROM drives becoming the shipment leader in 2000," he said.
Mr. Porter, however, qualified that the dearth of DVD-ROM content is still an issue in the industry.
|
