The growth of the disk storage market, which includes drives and media, has been driven over the last decade by the PC revolution. Over the next decade, it is expected to expand even faster, fueled by the multimedia revolution and Internet specific applications.
The volume of the disk storage market exceeded $36 billion in 1996 with the hard disk segment at $30 billion, and the optical disk segment at $6 billion. As can be noticed from Fig. 1.4a, the market share of the optical disk drives has been growing recently at 20% per year, faster than the hard disk drive market, as a result of the successful CD technology. These figures do not include revenues from media sales that may add additional $30 billion/year revenues to the optical disk segment.
Disk drive revenues were expected to exceed $50 billion/year in 1998 (Disk Trend) due to server applications driving increased sales of hard disk drives and from multimedia applications driving increased DVD sales.
Although Japan has a significant market share in the hard disk drive segment where the United States currently leads, the United States has only 1.5% market share in optical storage products where Japan leads. As described in Fig. 1.4b, the number of U.S. optical storage manufacturers has dropped significantly since the late eighties, while the number of Asian, and especially Japanese, manufacturers has increased dramatically. Several reasons can account for this disparity, including the slow acceptance of optical storage products and short-term strategies of the U.S. industry in the eighties, the focused interest of the U.S. industry on magnetic hard disk drives, and the economic recession in the United States in the late eighties. Another important reason is that optical storage manufacturing in Japan is backed up by a formidable optoelectronic industry that can manufacture CD related components at very low costs. Consequently, the Hewlett-Packard Company remains the only U.S. manufacturer with a profitable optical storage business, largely due to its considerable strength in optoelectronic component manufacturing.
CD-ROM products have clearly been generating the largest revenues ($4.6 billion/year in 1996) within the optical storage market since most PCs are shipped equipped with CD drives. Only two manufacturers are left in this area in the United States, while Japan has 14; however, it is striking that there are 36 optical library system assemblers in the United States compared to 18 in Japan. The optical library segment had $514 million sales in 1996 and is only growing at 4.5% a year. These U.S. producers of optical libraries assemble Asian-made CD drives in their systems but leverage on proprietary know-how in support software and networking. Presently these U.S. firms are relegated to the role of assemblers. However, with advanced MO drives and upcoming Internet-specific applications, there might be a brighter future in this area.
Fig. 1.4. (a) A comparison of worldwide hard disk drive and optical disk storage revenues and (b) disparity in the number of U. S. and Asian optical drive manufacturers (Disk Trend).
Fig. 1.5. (a) Distribution of CD-ROM and (b) optical library manufacturers.
In the U. S. removable media market, optical data storage products have been experiencing stiff competition from magnetic removable storage products such as IOMEGA's ZIP drive and SyQuest's SyJet drive products. Because the U.S. magnetic removable media manufacturers ventured into the removable market without negotiating compatibility standards, they have beaten the optical storage products to the market and gained considerable market shares. In Asia and Japan, however, magnetic removable products have only a negligible market share. The situation is reversed because in Asia the consumers appear to be more concerned with product compatibility. As can be observed from Fig. 1.6, optical storage products possess more than 90% of the recordable removable storage market in Japan. MO disk drives have the largest market share at 85%, with 1.7 million drives and 17 million media units sold per year. It should be pointed out that more recently, CD-recordable (CD-R) products have been gaining significant market share in the United States as well.
Fig. 1.6. Respective removable media market share distribution in Japan in 1997 (Fujitsu).
In summary, CD-ROM products are at the end of their product life cycle and are being replaced by DVD-ROM products that are starting to ship in quantity. CD-R shipments are up and CD-RW is moving in a big way. DVD-RAM products should come in soon. With a price drop in MO drives, there has been an upsurge in demand in Asia, but MO products still encounter stiff competition from magnetic removable drives in the U.S. market.