Hard drive prices have just about started to settle down after a tumultuous year, following floods in Thailand that left hundreds dead and took a severe toll on the country’s economy. The industry has also seen considerable consolidation over the past year due to WD’s acquisition of Hitachi GST and Seagate picking up Samsung’s hard drive division, thus effectively reducing competition in the space to three main players. Other familiar companies, including Maxtor, Quantum, IBM and Fujitsu have also shut down or sold out in the past decade. Seagate and WD each now account for nearly 40 percent of the world’s hard drive market, leaving 20 percent to Toshiba, the only other remaining player. We had a chance to chat with Ryusuke Kashiwabara, Senior Manager, Marketing of Toshiba’s Hard Disk Drive Division,  and got some interesting answers about the state of the industry and his own company’s plans to adapt to a changing world.

Mr. Kashiwabara (left) and Mr. Teh (right)

Mr. Kashiwabara (left) and Mr. Teh (right)

“Exactly a year ago, our facilities were severely damaged by the Thailand floods and basically 40-percent of the production capacity was gone at that time due to the event”, Kashiwabara-san told us. “Since then we have been gradually moving production capacity to other factories located in Philippines and in China. And that process is now complete, so now we are back to the pre-flood level of production capacity without the Thailand factory.”

Simultaneously, the maximum drive capacity has stagnated at the 2 TB mark, with larger drives still extremely rare and expensive, whereas before the floods, the introduction of higher-capacity models would push the prices of lower-capacity drives down every few months. Prices touched an all-time low in mid-2011, when a 1 TB hard drive cost around Rs 2,600 and a 2 TB drive cost around Rs 4,500.

As Kashiwabara-san confirms, “For some capacities the prices have in fact come very close to earlier prices, but yes there are some capacities where the price differential continues to remain. This is mostly due to the fact that these new drives now use a newer generation of technology, 500GB/platter. However, the biggest reason why prices are not going down is because there are fewer manufacturers left, there used to be 5 major players, but now we're left with only 3 manufacturers. So reduced competition is playing a part in slowing the rate at which prices are coming down. The days of low pricing for hard drives have probably come to an end, and in the future you will see more stable and balanced pricing continuing for longer periods of time.”

With things the way they are, the industry needs to be motivated to take the next big leap which will bring in much higher capacities and allow 1 TB and 2 TB drives to become the minimum standard in entry-level systems. For that to happen, further innovation beyond perpendicular recording and helium-filled drives will be necessary. The next big steps will be Shingled Magnetic Recording (SMR), which uses overlapping tracks on an HDD platter’s surface, and Heat-Assisted Magnetic Recording (HAMR), which will employ lasers and new alloy platter materials. SMR could theoretically raise the capacity of 3.5-inch drives to 16 TB but is not expected to be mature enough for shipping products till at least 2014. HAMR could push things up to the 40 TB mark, but will take another few years.

Big plans on the horizon

Big plans on the horizon

Kashiwabara-san agrees that it’s getting tougher to increase platter density. “Yes, that's true it is getting tough. The next jump in technology is going 640-660-670GB per platter, but as of now there is really no demand for that kind of capacity. And for us to achieve 750GB per platter it is going to be quite a while, it's probably going to happen in the 2014-2015 time-frame. We'll have to implement new technology to achieve that kind of areal density, using Shingled Magnetic Recording (SMR). To achieve 1TB/platter for 2.5-inch HDDs is going to be very, very difficult, and we don't see the same rate of drive capacity growth as was the case in the past.”

We asked Kashiwabara-san if desktop and laptop hard drives will even be relevant by that time, given current trends in cloud services and streaming media. Will the proliferation of smartphones, tablets and wireless broadband change the storage industry entirely? “Sales of smartphones and tablets have been affecting PC sales, and that will affect the sales of those drives” he said. “But people need to store data somewhere, one obvious choice is the cloud, but we believe that a better choice is to have your own personal cloud. So when you have a smartphone or a tablet, you don't even want to carry an external drive, and often there's no easy way to power and connect these drives to your mobile devices. We believe a NAS device is the answer to such situations, and we have recently launched a product in this space. Toshiba's Canvio personal cloud hard drive can be accessed through Wi-Fi locally or via smartphones or tablets remotely. We have Android and iOS apps that will help you to connect to your own data stored in your own personal cloud. This product will launch in November in the Indian market.”

What will the capacity and price of such a product be? “To begin with, it will be 2 and 3TB” he said. “It won't be enterprise class, so no RAID. It's just one drive so it should be very reasonably priced.” 

Inflated prices, reduced demand, and a lack of innovation would spell disaster for most industries, but both WD and Seagate have recently reported record-breaking profits. The reason is that our appetite for movies, music and games requires massive amounts of space, and we’re still buying drives despite the reduced value they have been delivering of late. The explosion of cloud-based services has also driven enormous demand for large-scale storage in data centers around the world.

Competition will come in the form of SSDs, which are growing cheaper every month but are not yet at a stage where they can challenge the HDD industry behemoth. Still, Kashiwabara-san has some fighting words: “Well we are going to concentrate on NAND technology as well as SSD products that our competition does not possess. So tablets not only use NAND flash, but have also started using SSDs, and that demand is growing rapidly. This segment Seagate and WD cannot reach out to, and we think we can have a good advantage here.

“We also planning to promote SSD adoption by creating a sort of SSD upgrade kit. So consumers who are tired of the slow and older HDD performance and adopt a faster SSD drive, and the older drive can be installed in an external kit and continued to be used. These initiatives will help us to compete. 

“We will also concentrate on hybrid drives. After having used smartphones and tablets people have become used to instant-boot up and app start times, on the other hand the PC using a regular HDD is terribly slow. But with hybrid drives we could give consumers tablet like experience, and this is again an area where we think we may do better than our competitors.”

So it certainly looks as though there are interesting times ahead, even if we won’t be returning to the glory days of dirt-cheap terabytes very soon.

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