Time to Buy OCZ! as STX raises SSD market outlook!!!
PC Sales To Pick Up, Seagate Readying Itself To Tap The Growing SSD Demand
While PC sales have been declining due to consumer softness in mature markets (the U.S. and Western Europe), slowing demand from emerging markets and IT spending cuts amidst weak macroeconomic environment, the trend is expected to reverse in the next half of 2013. Enterprises and retail users are expected to upgrade their desktops as the economy improves. Further, users who have been pushing their purchases due to weak consumer sentiment across the globe should be back to the market.
However, this could come with a higher adoption of solid state drives. Currently, SSDs are at least twice as expensive as regular HDDs and this cost differential is still causing price-conscious customers and enterprises to prefer HDDs. However, going forward SSD production costs are likely to go down significantly due to an improvement in technology. This should boost demand of SSDs as the cost advantage of HDDs will be diminished.
The other major reason for decline in PC sales was cannibalization from tablets. We estimate that tablet sales will outstrip notebook and netbook sales by the end of our forecast period. All tablet computers use solid state memory chips as their primary storage memory since HDD memory generally is comparatively unresponsive and bulky.
While Seagate was a little slow to adapt to changing trend in favor to the SSD space, it has been increasing its focus on SSD business to tap the growing demand. Last year, Seagate made investments in companies such as LaCie and DensBits to acquire expertise in the SSD and USB flash storage market. Seagate and DensBits are working on building “low-cost, high-performance” consumer SSDs.
Storage requirements are going up as evidenced by the fact that Seagate shipped over 47 exabytes of storage in Q3 with each disk averaging approximately 842 gigabytes. This is a 15% and 25% y-o-y growth in exabyte and average capacity per drive, respectively. This growth is being driven by increasing use of high definition content for media consumption and rich formats such as HD DVD and Blu-Ray.
Further, the high growth rate of digital content is driving the need for high capacity storage to aggregate, host, distribute, manage, back up and use digital content. Tablet and smartphone users also consume more digital content like online video streaming, email and music. While many of these mobile devices are increasingly becoming dependent on network attached storage, tablets with USB ports are also looking at external drives for additional storage capacity. Seagate, being one of the market leaders in hard disk drive (HDD) market, will continue to benefit from this surge in storage demand.
In addition, remote storage is becoming a standard for most enterprises and has even gained traction with retail customers for services like iCloud, Dropbox, Skydrive and Google Drive. An increasing number of businesses are deploying cloud computing environments in an effort to pool resources and cut costs. The traditional enterprise and client compute markets will continue to demand high capacity storage solutions.
from May 6 2013, 18:11 Seeking Alpha "Seagate's Revenue Declines, But Improving Outlook Lifts Shares"