Consumer Electronics Devices Drive Demand for Storage

With more than 30 million households already surfing at high-speed — and
more than 130 million expected by the end of 2007 — Internet users are
viewing high-quality streaming video content and many will be willing to pay
for it, according to research firm In-Stat/MDR.

Forecasts from the research firm put the market for consumer online
subscription video streaming services at roughly $991 million during 2003,
growing to more than $4.5 billion during 2007.

With the amount of
digital content growing at a near exponential rate, there is a logical need
for media-playback devices includes hard drives to store favorite music and
television programs on.

The big push is for consumer electronics devices, such as MP3 and DVD
players, to include hard drives in the same component. And, with many
content-loving consumers craving stored streaming video, magnetic hard drive
storage is emerging as the method of choice over other formats, according to
research group In-Stat/MDR.

In-Stat/MDR predicts that consumer electronics with integrated hard drives
will represent about 7 percent of the total hard drive market, which is
nearly double that of 2002. Looking forward, the research firm expects the
market to grow from 9.3 million units in 2002 to about 16.7 million units
this year, at a compound annual growth rate of 56.7 percent over the
2002-2007 period.

In-Stat/MDR analyst Cindy Wolf summed up the trend.

“As the PC market, which represents the bulk of hard drive shipments, has
matured, there has been an increased emphasis by storage manufacturers to
address, and even formulate, specific strategies to address the consumer
electronics (CE) market,” Wolf said.

Wolf said currently the majority of consumer electronics devices built with
hard drives include personal video recorders (PVRs), such as TiVo, and
portable digital audio players. With a choice of 10G, 20G, or even 30G hard
drives, Apple’s iPod is a classic example of this.

Even video game consoles,
such as Microsoft’s Xbox, come with a hard drive. In fact, these products
will remain the largest segment for CE devices with integrated hard drives.

“At this point, even though there is only one game console with an
integrated drive, its shipment numbers for the year are the highest…” Wolf told ..”and as the other consoles begin to introduce their next gen products duing the forecasted period, people will replace their old ones and new gamers will also be attracted… making this the largest market opportunity.”

However, the times they are a changing, according to Wolf, who said she
anticipates the personal digital assistants, handheld PCs, portable A/V
players, televisions, and digital camcorders will all tend toward the hard
drive persuasion, leaving lucrative opportunities for hard drive makers.

In other findings, Wolf said 3.5-inch drives will continue to reign in CE
devices because they are less expensive than 2.5-inch, 1.8-inch and 1-inch
drives and hold the most content. In 2002, this size drive was integrated
into 92 percent of CE devices with integrated hard drives.

Wolf also said PVRs have been gaining traction as both consumers and box
manufacturers, with satellite set top boxes with integrated hard disk drives
making up the bulk of PVR unit shipments.

The research is part of a “Hard Disk Drives For Consumer Electronics:
Digital Entertainment Devices Drive Demand for Storage” study.

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