Hard drive market bottoms out

Poor results from Seagate and Quantum and the demise of vendors such as Micropolis have tarnished the hard disk drive market image but Twohig stands by the report made last June by US research company Disk/Trend that the worldwide market for hard disks is extremely healthy.

"The pie is only so big," said Twohig. "Hard drive vendors over-produced to try and meet demand, prices fell and vendors were left holding a lot of inventory. Compaq also increased its inventory expecting a product shortage. The shortage didn't happen and Compaq stopped buying for a while and this hit Seagate in particular."

Twohig added that as far as he was concerned, the market is still in very good shape. "Demand is still great and we seem to have bottomed out in terms of vendor problems. The realignments, redundancies and financial charges seem to be out the way now and now IBM seems to be surging ahead on the back of its Giant MR Heads technology. This enables IBM to price a 5Gb drive at the same level as a 4.5Gb."

Twohig suggested that the technology owners are in a good position and added that the emergence of Fibre Channel will enhance the market. Compaq has already announced that it is also aiming to deliver Fibre Channel storage in Q1 this year.