February 17, 2012 – The hard disk drive storage industry will spend heavily on innovation and recovery from floods at Thai production centers over the next four years, according to a new report from Coughlin Associates. In response, enterprise investment will continue to and vie for a temporarily decreased storage disk supply.

The California-based storage consultancy released its 15th annual “2012 Hard Disk Drive Capital Equipment and Technology Report” to forecast its expectations of the technology and capital spending for the hard disk drive industry.

Overall industry spending on capital equipment this year is expected to hit $2.4 billion, split between process equipment (72 percent), production test (21 percent) and metrology (7 percent). Growth in HDD capital spending is expected to rise 169 percent between last year and 2016, primarily based on the increase in unit shipments, Coughlin reported.

Due to higher demand for disk drive storage and higher prices spurred by limited supplies, HDD and component providers will invest more cash in equipment and technology development in 2012 and 2013.
Tom Coughlin, founder of the data storage consultancy, says that one of the big factors behind the steady projected growth in hard drive investment is the spike in data volumes and network traffic at the enterprise level.

“Enterprise storage using HDDs must increase to support this data flow and the applications and other cloud based services based upon on-line access. At the same time, I expect that flash will increasingly be used with HDDs to give a good combination of storage performance and storage cost both in the enterprise and in client computer and consumer devices,” Coughlin says.

As a result of the destruction from floods in Thailand in October and November 2011, large segments of the PC and disk drive industries were forced to halt production. Spending to repair or replace flood-damaged facilities may register more than $1 billion between the last quarter of 2011 and the first quarter of 2012. In part, that will lead to higher HDD prices of about 10 to15 percent higher than those in 2011 until “at least until 2014,” according to the report. Coughlin expects capital purchases from 2014 and beyond to be driven by increasing unit demand at about 14 percent annual growth as well as the introduction of an innovative, laser-based data recording method known as heat-assisted magnetic recording.

The full, 207-page report is available for a fee by visiting here.

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