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Few things remain constant for very long in the disk drive industry, and the 15 years that have elapsed since several of us met one day to form a trade association have seen an amazing number of changes. Even the association's name had to be changed! The name originally was DEMA (Disk Drive Equipment Manufacturers Association). Unknown to the founders, another trade association was already using that set of initials, so a quick change was necessary-International was added to the acronym, and IDEMA became the trade association for the worldwide disk drive industry.
In IDEMA's first 15 years, the industry's markets, products, technology, manufacturing arrangements, and companies participating have undergone constant change. Fifteen years ago mainframe computer applications, which provided the initial markets for disk drives, were still the largest revenue producer for the industry. Minicomputers were being challenged by the new wave of desktop computers, but continued to consume significant quantities of disk drives. Personal computers were becoming a widely used tool throughout the business world, and the PC created a fast-growing new demand for low-end disk drives, including new 3.5-inch models, the smallest HDDs in production at the time.
As the markets for HDDs produced by 75 worldwide manufacturers were diversifying 15 years ago, so too were the markets for the other forms of disk drives that followed the development of the HDD. The flexible disk drive market had attracted 63 manufacturers and progressed from 8-inch to 5.25-inch, to 3.5-inch industry standards, as computers became physically smaller. Twenty-one manufacturers were making various optical disk drive formats, including the new CD-ROM drives starting to be in demand for the emerging personal computer market.
With the passage of time, additional new markets for disk drives have appeared. The growth of the notebook computer generated demand for the 2.5-inch HDD (first shipped in 1988). The continuing growth of applications for mobile devices stimulated the development of the 1.8-inch HDD (first shipped in 1991), the 1.3-inch drive (a false start that first shipped in 1992), and the 1-inch drive (first shipped in 1999). A variety of consumer video applications have also provided incentive for HDD manufacturers to develop special models of current drives, to efficiently deliver uninterrupted video content at low cost.
Small Time to Big Time
Although there were 75 active HDD manufacturers in business 15 years ago, the disk drive industry was still relatively modest in size. Less than 8 million HDDs were shipped in 1986, producing worldwide sales revenue of $14.7 billion, with 44 percent held by IBM. 69.6 percent of1986 worldwide HDD sales revenues were for captive drives produced by system manufacturers (for sale with their computer systems). With the exception of the captive-drive manufacturers, each of today's leaders in HDD unit shipments had less than 5 percent share of the 1986 market.
Explosive growth in the HDD markets was underway. By 1990, the industry's annual shipments reached 27.8 million drives, followed by 89.5 million drives in 1995, with this year's shipments expected to exceed 200 million drives. The industry's product mix was also changing rapidly as new markets appeared, and existing applications demanded more disk capacity.
The result was a growth industry based on short product life cycles, and a majority of the participating manufacturers lacked managements equipped with the planning, coordinating and leadership skills required for survival. The HDD industry is now comprised of 13 companies with active product lines plus a few more that hope to begin shipments. A similar consolidation occurred among floppy disk drive producers, with only 14 manufacturers still active today. Optical disk drive production started later and the number of drive manufacturers didn't peak until 1995, with 60 manufacturers. By 2000, that number had declined to 41 manufacturers.
What is a Disk Drive Manufacturer?
The manufacturing infrastructure of the disk drive industry is not well understood by most people who are not active participants. A disk drive "manufacturer" performs the final assembly of a HDD, but hundreds of other manufacturers provide the recording heads, disks, motors, semiconductors, and other parts that make such a product possible. During the 15 years since IDEMA's formation, there have been many significant changes in the industry structure. Vertical integration, the internal production of drive parts by disk drive manufacturers, has steadily increased, with about half of all heads and disks now made internally by drive manufacturers.
In 1986, most of the final assembly of disk drives was still performed in the home country of the drive manufacturers, but the trend to offshore production had already started. Drive manufacturers headquartered in the U.S. started the 10-year migration of HDD assembly operations to Singapore, Malaysia, Thailand, and China, followed by Japanese drive manufacturers using plants in some of the same countries, plus the Philippines. Due to the availability of excellent transportation facilities, cost-effective labor, and a cooperative government, Singapore became the leader in disk drive shipments, ramping from less than 4 million drives in 1986, to over 50 million per year currently. As Singapore's increasing population of technology industries has stimulated rising labor costs, most of the Asian growth in disk drive production has moved to other Southeast Asian countries and China, yet Singapore remains the leader.
Evolution in the industry structure, and continuous movement of manufacturing operations to more efficient locations, combined with constantly improved technology, has produced a unique set of characteristics in those who have lived through the changes: (1) They are extremely adaptable and able to change rapidly with the flow of new products, methods, personnel, and locations, (2) They learn quickly, (3) They are impatient and aggressive in their work habits, since they can't afford to be left behind by the competition, and (4) They absolutely must have a sense of humor, to avoid becoming frustrated with all of the bright, pushy and assertive people they have to work with.
New Ideas Inside the Box
Despite growing markets, the disk drive industry wouldn't be what it is today without a history of extremely aggressive product development, which made possible the storage capacities and low prices required by those markets. In recent decades, disk drive manufacturers have been forced by competitive pressures to convert basic laboratory research into producible disk drives as quickly as possible, while maintaining high standards of product reliability.
The most frequently used measurement of the industry's technical progress is areal density. Fifteen years ago the highest areal density achieved in a drive shipped that year was 29 megabits/square inch. By the end of 2001, the HDD industry had been shipping drives with areal densities 1,000 times greater than in 1986.
Advances in recording heads and disks have been critical in achieving areal density increases, and 15 years ago major changes were underway. Both plated and sputtered thin-film disks came into use during the 1980s. In 1986, about half the disks used were still based on the oxide coating methods used in the world's first disk drive-30 years earlier. The early 1990s saw oxide disks generally replaced by thin-film disks in new designs, with further refinements continued. Glass disk substrates, valued for improved stiffness and smoothness, have replaced aluminum substrates in many types of drives, and sophisticated disk texturing has been used to correct head stiction problems.
Many of the industry's most sophisticated advances have been made in recording heads. With non-stop annual improvements in areal density, the technology employed and physical shape of heads has evolved rapidly. Fifteen years ago, ferrite heads were still used in most HDDs, with usage of thin-film heads generally limited to drives designed for high-end server applications. Thin-film heads made higher-density recording possible. The appearance of MIG (metal-in-gap) versions of ferrite heads, at lower prices, slowed the transition to thin-film heads into the mid-1990s. Introduced in 1991, MR (magnetoresistive) heads that combined thin-film write and MR read elements in a single slider became the designer's choice for high-end drives. The introduction of GMR (giant magnetoresistive) heads in 1997 continued the ongoing trend to higher areal density and within a few years, the majority of HDDs shipped had GMR heads.
Head contours and suspensions also improved over the past 15 years, as increasing recording density required lower flying height and spacing between disks diminished. Many ferrite heads were patterned after IBM's 3350 head designs, but over time the industry transitioned to minisliders, microsliders, nanosliders, picosliders, and femtosliders-along with several interesting variations in physical shapes-in order to fly at nearly constant altitudes a few microinches above the disk surface.
Drive performance improvements have also driven dramatic changes in drive models designed for high-end applications. In 1986, most HDDs operated at 3,600 RPM, but an appetite for faster latencies stimulated an upward trend in 1989, when Imprimis introduced a family of high-capacity 5.25-inch drives operating at 5,400 RPM. Seagate Technology pioneered 3.5-inch 7,200 RPM drives in 1993, 10,000 RPM drives in 1997, and 15,000 RPM drives in 2000. The race to higher RPM generated numerous programs by drive manufacturers and their suppliers to control heat, vibration, noise, and cost. The results eventually were successful, to the extent that the 5,400 and 7,200 RPM speeds are now standard in the very competitive desktop HDD market.
Fifteen years of performance improvements have also required striking changes in head-positioning mechanisms and data channel electronics. In 1986, it was common for drives with rotary voice-coil actuators to have average seek times of 20-30 milliseconds. Many drives for the desktop market still used stepping-motor actuators with seek times in the range of 80-90 milliseconds. Today's server drives have seek times as fast as 3.4 milliseconds, and desktop models are mostly in the 8-9 millisecond range. Drive transfer rates in 1986 were normally 625 kilobytes/second for desktop drives, and up to 3,000 kilobytes/second for high-end drives. After numerous generations of improved channel electronics and interface standards, desktop HDD models now have transfer rates up to 100 megabytes/second and server drives now offer up to 320 megabytes/second SCSI and 400 megabytes/second FC-AL.
What Does the Customer Want?
The disk drive industry has always responded to the individual demands of each market for disk drives. The market for high-end (or server) drives wants high performance, a convenient method for grouping large numbers of drives together, and a very competitive price. The desktop computer market wants moderate performance, quiet drives that will fit in the planned form factor, and a very competitive price. The market for mobile drives wants modest performance, low-power drives in sizes appropriate for a variety of mobile applications, and a very competitive price. The emerging market for consumer video applications wants drives with enough performance to sustain video streams without interruption, a lot of capacity and no noise, and the most competitive price imaginable.
To the surprise of many, the surviving manufacturers in the disk drive industry have evolved into a small group of companies that are able to supply these markets with a high level of efficiency. These companies (the survivors) have learned how to design products rapidly for specialized applications, how to implement improved technology and product cost reductions promptly, how to manage a complex supplier infrastructure efficiently, how to assemble complicated electromechanical products by the millions at low cost, and how to sell the output.
The final judgment on the disk drive industry's level of success must inevitably be measured in dollars and cents. The most dramatic measurement will be the rate of improvement in what the industry's customers receive. A dozen years ago the overall average price per megabyte of all the HDDs shipped was $11.54, while in the past year that price has fallen to 1¢ per megabyte. Can any other industry claim to have improved the value of its products at that rate? The most amazing fact is this: during portions of 2000, some of the disk drive manufacturers operated at a profit.
James N. Porter, president of DISK/TREND, Inc., first became involved with data storage products in 1968, when he joined Memorex, serving in a variety of marketing management positions through 1971. After experience with early hand-held calculators at Rockwell International, the first consumer video tape recorder at Cartridge Television, and with the original computer-controlled video-editing systems at CMX Systems, a CBS-Memorex joint-venture, he began his own management consulting business in 1974.
The DISK/TREND Report, an annual market study of the worldwide disk drive, disk drive array and removable data storage industries, was founded in 1977. After 23 years, DISK/TREND's publishing activities were phased out, and Jim is now concentrating on preparation of histories of the disk drive industry, in addition to consulting with the management of data storage manufacturers on strategy. He is also a founder of the disk drive industry's trade association, and a member of its board of directors and executive committee.
3255 Scott Blvd / Suite 2-102 / Santa Clara, CA / 95054-3013
tel 408.330.8100 / fax 408.492.1425 / www.idema.org
IDEMA is a registered trademark of the International Disk Drive Equipment and Materials Association.
This article first appeared in the July/August 2001 (DISKCON USA Preview) issue of INSIGHT magazine. Reprinted with permission.
© Copyright 2001 IDEMA. All rights reserved.
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Figure 1. Number of active disk drive manufacturers.
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Figure 2. Annual shipments of HDDs, FDDs, and ODDs (in millions of units).
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Figure 3. Price per megabyte history.
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