Storage Peripherals: No Peripheral Cause

The rise of storage peripherals as a mainstream IT product line

has been in sync with the consumerization of IT products. While the need for

storage of new digital entertainment content has resulted in the rise of optical

disk drives, demand for mobility and flexibility has been the major reason

behind the increasing demand for flash drives. That has resulted in a sharp drop

in the prices of flash drives, which in turn has fuleled further growth.

External hard drives, however, do not have the lifestyle appeal of a flash

drive. Neither do they match the ODDs in terms of ease of use and convenince,

resulting in a decline of their market.

External Hard Drives



This was indeed a slow year for the Indian external hard disk market, as
dwindling demands led to a 17% decline in revenues. It needed no rocket

scientist to determine the reason behind the fall: increasing capacities of hard

disks internal to PCs and laptops meant fewer takers for external HDDs. Though

professionals like photographers, designers, music buffs, gaming enthusiasts and

composers still preferred external HDDs due to their portability, major players

like Seagate, Samsung, and Western Digital focused on increasing capacities of

internal disks.

The year also saw the external hard disk industry reaching few

long awaited milestones: When the internal hard disk market saw the launch of 1

Tb (terabyte) storage, Seagate built the excitement with a 750 Gb external hard

disk launch. The trends more or less revolved around portability, plug and play,

high-speed interfaces, ruggedness, and low power consumption. The lower prices

were also a major factor driving sales.

Players like Seagate, Western Digital, and Hitachi ruled the

marketin that order. With so much digital content creation on a regular

basis, the need for larger capacity storage devices offering mobility is

expected to grow further, though at a slower rate. However, the share of

external hard disks out of the total requirement will see an upsurge in the

coming years.

Flash Drives



At a time when external HDDs, high definition DVDs and new arrival, Blu-ray
disks made headlines, the lower storage and mobility market was under the

control of USB drives or flash drives. Despite being an unorganized market, the

growth was astounding, which was further proving the popularity of this media.

The shift from FDD to pen drives continued throughout the year due to the high

demand from working professionals, students, and home users.

According to Shiladitya Sarkar, manager, Peripherals

Research, IDC India, "TheIDC estimated shipments for flash

drives through official channels in India stands at 750,000 units for the second

half of 2006. However, this official shipments estimate represents less

than 5% of the total estimated shipments forthis family of products in

India during 2006."

External Hard Disks

23

Flash Drives

225

Optical Disk Drives

434

Based on Dataquest research, the unofficial shipments largely

include imported units from countries like Taiwan, Thailand, China and others.

The heavy tilt in favor of the unorganized market may be attributed to

the nature and usability of the product (USB/thumb drives), informal

channels structure, and evolving user needs. According to DQ estimates the total

market size for flash drives in India stood at Rs 225 crore. The total volume of

flash drives touched the figure of 300,000 unit. The market share was divided

among various players and no one emerged as a clear winner. However, the players

who had significant tractions were SanDisk, Kingston, and Transcend. Moser Baer

also ventured in this market anticipating the high growth. 2 Gb storage became

the new benchmark, though smaller and cheaper sizes remained popular.

Optical Disk Drives (ODDs)



The year was a very promising one for the ODDs market. During the year, it

witnessed resurgence despite the fact that other storage media were constantly

gaining more market and popularity. The growth in USB drives usage did not have

too much of an impact on the ODD market, as the consumer segment lapped up ODDs

because of ease of use and convenience.

The total market size for the CD-Rs stood at Rs 264 crore,

riding on a volume of 22 crore units. Moser Baer remained dominant in this

market with 40% share and an earning of around Rs 106 crore. Other players like

Sony, LG, Intex, NCP also performed well. An improved pricing cycle for CD-Rs,

robust growth in DVD-R and a subdued PC cost environment were key enablers for

growth.

This year also saw huge rise in the DVD market, which was a

lesser-used media uptill now. Due to a constant reduction in price, the DVD

market gained momentum total revenue amounted to Rs 170 crore, with 5 crore

units sold during the year. In the DVD market also, Moser Baer was the

undisputed leader with total earning of Rs 68 crore. Few other prominent players

in this segment were Sony and LG.

With the world moving toward high definition, the year also saw

the arrival of revolutionary Blu-ray Disks based on the Blu-ray technology. Blu-ray

discs offer a storage capacity of



25 Gb, close to five times the resolution of conventional DVDs. Moser Baer and
Sony were the first ones to launch this in the market. The demand for the next

generation high-density formats, including HD-DVD and Blu-ray media, is expected

to grow sharply in the years to follow.

Kumar Anshuman



anshumank@cybermedia.co.in