Unlike in the digital audio player market, the fight between NAND flash and hard-disk drive (HDD) on the PMP platform is far from over. The 1.8-inch HDD still has a firm grip on the PMP category that requires storage capacity of 20 Gigabyte or higher due to the cost per byte advantage over NAND flash. Our consumer survey indicated that among PMP owners, hard drive-powered devices still account for a slight majority of the ownership. On the other hand, the micro-drive segment (1-inch or the 0.85-inch HDD), which features a capacity ranging between 4-12 GB, has been hit hard by the NAND flash as its cost-per-byte lead—which it enjoyed during 2003-2005—has dissipated, and NAND flash’s merits (durability, low power consumption, and light-weight) earn it the preferred status for the low storage PMP category.
1.8-inch HDD makers, mainly Toshiba, Hitachi, Seagate, and newcomer Samsung, are fully aware of the threat the NAND flash is posing to their HDD business for portable CE market. Therefore, their battle strategies include:
1) Maintain the cost advantage by enhancing capacity at the same cost. In September 2007, Toshiba launched two new 1.8-inch HDD models: one with 80 GB storage using a single platter, and the other doubling the capacity using two platters. Samsung made a similar announcement two weeks earlier.
2) Dress up the HDD with features that make it slimmer, more energy efficient, and more durable. For instance, the 60GB, 1.8-inch HDD from Samsung or Seagate is measured at only 5mm (0.2-inch) thin. The latest Toshiba 160GB model consumes 0.32 watt of power in idle condition, compared with the 1.5-watts industry average. And Seagate has long been touting its G-force technology, an anti-shock feature that protects the drive by moving the heads off the platter when the device is powered off, thus during a drop, no parts make contact with the media inside the drive. All of these features are aimed at keeping HDD as a viable option for portable device manufacturers.
3) Support CE-ATA, a portable CE-friendly storage interface. The new interface standard replaces the Serial ATA, an interface well-suited for mainstream computing applications that emphasize faster data transfer rates but care less about power consumption. CE-ATA, on the other hand, addresses well the key challenges of a PMP design: cost-effective integration and maximum power efficiency. The CE-ATA Specification 1.0 was finalized in March 2005. Since then, Hitachi has been a strong promoter of the new standard; Seagate has also conformed to the standard in its latest 1.8-inch HDD models. But Toshiba and Samsung support both the CE-ATA and the legacy PATA interfaces on their 1.8-inch drives.
On the other side of the aisle, flash memory manufacturers are gearing up their production capacity and re-drawing the roadmap to further challenge the HDD’s role in the market for portable entertainment devices. According to the theory first publicized in 2002 by Dr. Chang Gyu Hwang, president and CEO of Samsung Electronics’ Semiconductor division, flash can double its density growth every 12 months. Like the famous Moore’s Law, the prediction has worked out quite well over the last five years as NAND flash storage capacity grew from 256 MB in 2002 to 16 GB in 2007. Apple has already incorporated the 16GB NAND flash in its latest iPod Nano models. If the theory continues to hold, the next milestone will be 32 GB in early 2008. It will be just a matter of time before the manufacturers to ramp up production and bring the cost down to a market-acceptable level. Samsung debut the world’s first 32GB flash card in September 2006, followed by SanDisk in January 2007. And in early 2008, Apple released its latest iPod Touch with 32GB flash memory—just what we have predicted for this capacity flash memory to go mainstream.. Looking ahead, flash is expected to reach 60GB or higher during the 2009-2010 timeframe, at which point it will begin to take away the medium-storage PMP market share from the 1.8-inch HDD manufacturers. Companies that do not have assets in the flash business have come to grips with such a trend. Seagate, for instance, has not only produced hybrid drives mixing both flash and HDD, but also announced plan in September 2007 to make flash-based, solid-state disks from 2008, a measure to hedge its bets in the consumer electronic market, in our analysis.
This article was published for the 2008 CONNECTIONS™ Conference Industry Insights, the official publication of CONNECTIONS™.
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