Slow PC sales to dampen storage markets as well
With the reports of declining PC sales becoming a yearly trend, it is mostly likely to hit the storage market as well. Recent reports from IDC indicate that quarterly shipments in PCs fell 14 percent from Q4 2012. This marks two quarters in a row of significant PC shipment declines (Q4 2012 was off about 10 percent from the prior quarter). Declining shipments of PCs will have a significant impact on client applications for digital storage devices such as HDDs and SSDs, reported Forbes.
According to the report, PC sales declined starting in 2010 after the release of the iPad and in 2011 sales were slow but seemed to be recovering until shortages of HDDs occurred in the last quarter of the year due to the impact of the Thailand floods on HDD component factories. These shortages continued through the first half of 2012, but by the time HDD manufacturing recovered in the 2nd quarter of 2012, PC shipments and thus HDD shipments took a dive in the last half of the year.
Forbes said that the second half of 2012 decline appears to be directly related to the popularity of tablet computers and smartphones and a change in consumer and corporate purchasing to favour these devices over notebook and other computers. The continuing decline in the first quarter of 2013 means that Windows 8 and the current generation of ultrathin notebook computers have not reversed the tide of declining PC shipments.
HDD shipments in 2012 were less than in 2011 mostly due to the decline in PCs, especially notebook computers. As pointed out in a late December 2012, the rate of growth in notebook computer HDDs has been declining since 2009 and in 2012 this rate of growth went negative. The declining first quarter 2013 PC numbers indicate that PC HDDs will likely continue to experience negative growth through 2013 unless something dramatically changes in the notebook computer market. This will have implications for the unit growth of HDD products from Seagate, Western Digital and Toshiba.
The decline in notebook computers will also impact the flash memory market. Although flash memory is used in all tablet and smartphones, it is also used in solid state drives (SSDs) used in some notebook computers, especially the Ultrabook ultra-thin notebook products promoted by Intel and other companies over the last year and a half. Client SSD shipments will also be impacted by a decline in PC shipments, the report stated.
Since individual SSDs used a lot more flash memory chips than consumer products like tablets and smartphones this means that flash memory shipments will likely suffer as a result of the PC downturn. This may result in excess inventory of flash memory chips resulting in lower flash memory prices and possibly greater demand for resulting lower priced tablets and smartphones. This could have some negative impact on earnings for flash memory companies such as Samsung, Toshiba and others, it reported.
If the rate of decline in PCs continues through 2013 client HDD and SSD shipments will be significantly impacted. On the other hand, there are indications that enterprise storage systems using enterprise HDDs and SSDs are showing significant growth. After all mobile consumer devices depend upon the cloud—that is datacentres—for stored information that won’t fit on the mobile devices. Thus 2013 may see a significant shift away from client HDDs and SSDs to enterprise products, the website reported.
Although enterprise storage devices are more expensive than client storage devices in general they also ship in lower volumes than client devices. This is because their overall storage capacity utilizations are much more efficient and thus fewer storage devices are needed to store needed customer content. In addition using content from cloud datacentres also reduces the need for multiple copies of some data on client storage devices and thus reduces the overall potential growth of stored capacity required. Thus a switch from client to enterprise storage capacity will fundamentally change the HDD and SSD markets, said the website.
In order to reverse or at least stem the decline in notebook PCs and thus the decline in client HDDs and SSDs some major changes will be needed in these products. First, Microsoft needs to drop Windows 8 and introduce a product that meets the real needs of notebook computer users. Second, since the growth that has occurred in notebook computers has been primarily in the newer ultra-thin notebook computers, built mostly using expensive SSDs notebook computer manufacturers need to look at ways to improve these devices and built upon that growth.
One of the best ways to try and control the fall in notebook computer demand might be to provide products that offer adequate storage capacity for lower costs than SSDs and with speeds close to that of pure-SSD ultra-thin notebooks. The next generation of thin hybrid HDDs that combine some flash memory on the HDD could provide a means to accomplish this sort of ultra-thin notebook computer product. It is clear that ultra-thin notebooks either with all SSDs, hybrid HDDs or even small SSDs with larger capacity HDDs in the same package could meet the needs for a future generation of notebook computer users, it reported.
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