Storage peripherals: No peripheral cause

The rise of storage peripherals as a mainstream IT product line has been in sync with the consumerization of IT products. While the need for storage of new digital entertainment content has resulted in the rise of optical disk drives, demand for mobility and flexibility has been the major reason behind the increasing demand for flash drives. That has resulted in a sharp drop in the prices of flash drives, which in turn has fuleled further growth. External hard drives, however, do not have the lifestyle appeal of a flash drive. Neither do they match the ODDs in terms of ease of use and convenince, resulting in a decline of their market.

External Hard Drives

This was indeed a slow year for the Indian external hard disk market, as dwindling demands led to a 17% decline in revenues. It needed no rocket scientist to determine the reason behind the fall: increasing capacities of hard disks internal to PCs and laptops meant fewer takers for external HDDs. Though professionals like photographers, designers, music buffs, gaming enthusiasts and composers still preferred external HDDs due to their portability, major players like Seagate, Samsung, and Western Digital focused on increasing capacities of internal disks.

Flash drives contributed Rs 225 crore

CD-Rs contributed Rs 264 crore while the DVD market took off with contribution of Rs 170 crore

The year also saw the external hard disk industry reaching few long awaited milestones: When the internal hard disk market saw the launch of 1 Tb (terabyte) storage, Seagate built the excitement with a 750 Gb external hard disk launch. The trends more or less revolved around portability, plug and play, high-speed interfaces, ruggedness, and low power consumption. The lower prices were also a major factor driving sales.

Players like Seagate, Western Digital, and Hitachi ruled the marketin that order. With so much digital content creation on a regular basis, the need for larger capacity storage devices offering mobility is expected to grow further, though at a slower rate. However, the share of external hard disks out of the total requirement will see an upsurge in the coming years.

Flash Drives

At a time when external HDDs, high definition DVDs and new arrival, Blu-ray disks made headlines, the lower storage and mobility market was under the control of USB drives or flash drives. Despite being an unorganized market, the growth was astounding, which was further proving the popularity of this media. The shift from FDD to pen drives continued throughout the year due to the high demand from working professionals, students, and home users.

According to Shiladitya Sarkar, manager, Peripherals Research, IDC India, "TheIDC estimated shipments for flash drives through official channels in India stands at 750,000 units for the second half of 2006. However, this official shipments estimate represents less than 5% of the total estimated shipments forthis family of products in India during 2006."

Based on Dataquest research, the unofficial shipments largely include imported units from countries like Taiwan, Thailand, China and others. The heavy tilt in favor of the unorganized market may be attributed to the nature and usability of the product (USB/thumb drives), informal channels structure, and evolving user needs. According to DQ estimates the total market size for flash drives in India stood at Rs 225 crore. The total volume of flash drives touched the figure of 300,000 unit. The market share was divided among various players and no one emerged as a clear winner. However, the players who had significant tractions were SanDisk, Kingston, and Transcend. Moser Baer also ventured in this market anticipating the high growth. 2 Gb storage became the new benchmark, though smaller and cheaper sizes remained popular.

Moser Baer revolutionized the ODD market with their home DVDs

Optical Disk Drives (ODDs)

The year was a very promising one for the ODDs market. During the year, it witnessed resurgence despite the fact that other storage media were constantly gaining more market and popularity. The growth in USB drives usage did not have too much of an impact on the ODD market, as the consumer segment lapped up ODDs because of ease of use and convenience.

The total market size for the CD-Rs stood at Rs 264 crore, riding on a volume of 22 crore units. Moser Baer remained dominant in this market with 40% share and an earning of around Rs 106 crore. Other players like Sony, LG, Intex, NCP also performed well. An improved pricing cycle for CD-Rs, robust growth in DVD-R and a subdued PC cost environment were key enablers for growth.

This year also saw huge rise in the DVD market, which was a lesser-used media uptill now. Due to a constant reduction in price, the DVD market gained momentum total revenue amounted to Rs 170 crore, with 5 crore units sold during the year. In the DVD market also, Moser Baer was the undisputed leader with total earning of Rs 68 crore. Few other prominent players in this segment were Sony and LG.

With the world moving toward high definition, the year also saw the arrival of revolutionary Blu-ray Disks based on the Blu-ray technology. Blu-ray discs offer a storage capacity of

25 Gb, close to five times the resolution of conventional DVDs. Moser Baer and Sony were the first ones to launch this in the market. The demand for the next generation high-density formats, including HD-DVD and Blu-ray media, is expected to grow sharply in the years to follow.