The Enigmatic HDD Industry Where Smaller IS Better

The Enigmatic HDD Industry – Where Smaller IS Better IDEMA San Jose September 2004 10/2/2020 1

Here We Go Again. Does the HDD Community spend Their days looking up redundant in a thesaurus, only to find the Definition as: Please see redundant ? ? – it sure feels that way! 10/2/2020 2

Demand is Not an Issue § Desktop year-year demand strong § 2004 Desktop to be up ~8 -10% § Enterprise holding its own § 2004 Enterprise to be up ~12% § Notebook PCs surging § 2004 Notebook to be up ~25% § CE demand remains white-hot! § 2004 CE shipments will surpass 30 M representing an 85+% growth – and ~10% of global market opportunity

Global HDD Shipments Units, Millions

Global SFF HDD Shipments Units, Millions

CAGR Comparisons ! 2003 -2007 § 3. 5” CAGR = 9% § 2. 5”-and-below CAGR = 26% § 2. 5” CAGR = 22% § 1. 8” CAGR = 44% § <=1. 0” CAGR = 90% § Total HDD Market CAGR = 13% § Thus, 3. 5” lags the market, but all others are leading the charge!

2. 5” HDD Demand Drivers § Final 2003 result: 46. 9 million HDDs § Updated 2004 forecast: 58 -60 million § Why so strong? : § Notebook PC demand insatiable § CE applications heating up § Still some MP 3 – but dwindling § AIS, routers, switches, printers § Desktop not yet a factor § Enterprise offerings on the way!

2. 5” HDD Capacity Forecasts Units, Millions

2. 5” HDD Markets and Thoughts § Strong notebook PC demand in 2003 – units up 33% sequentially § 2004 Notebook PC forecast: up ~30% § Enterprise is coming – 2 H 2004! § Is 2. 5” for CE getting squeezed? § CE opportunity not taking hold § MP 3 players opting for smaller HDDs § Printer market aimed at high-end § AIS – is HDD needed globally?

1. 8” HDD Demand Drivers § Final 2003 result: 2. 7 million HDDs § 2004 forecast: 6. 0 million § Why so strong? : § Did you ever hear of an i. Pod? § Apple and HPQ relationship for h. Pod § Copycat MP 3 players coming full steam § Are pretenders now p. Pods? § Numerous other CE opportunities § Notebook PC opportunity § Thin, lightweight models

1. 8” HDD Capacity Forecasts Units, Millions

1. 8” HDD Markets and Thoughts § MP 3 opportunity is largest – 2003 shipments topped 2 million § 2004 1. 8” MP 3 forecast: up 115% § Notebook niche expanding § No threat on desktop/enterprise § Today only Toshiba and HGST – where are the others? GS soon? § Many are looking to skip this and go to 1. 0” – what does this mean for 1. 8”?

<=1. 0” HDD Demand Drivers § Final 2003 result: 923, 000 HDDs § 2004 forecast: 3+ million § Why so strong? : § § § Did you ever hear of i. Pod mini? Now 4 suppliers – more coming Digi-Cam (DSC, DVC) demand rising Mini MP 3 (other than i. Pod mini) 0. 85” announced § Cell phones – the holy grail!

<=1. 0” HDD Capacity Forecasts Units, Millions

<=1. 0” HDD Markets & Thoughts § MP 3 now getting all the press § 2004 1. 0” MP 3 stumbles early in year doing little to stem demand § Digi Cam picking up – prices lowered! § Now 4 players – HGST, Cornice, GS Magicstor, and STX– more coming § Patent issues hurting GS and Cornice § 0. 85” addressing the holy grail of the cell phone market – is it real? YES!!

Inhibitors § Capacity – is there too much? § New facilities all around! § Media Issues in SFF § Limited glass supply § Technology Spending Crisis § Long-term issue, or election year issue § Flash will NOT go away § As much as this has not yet been a large factor, work is ongoing

Infrastructure Readiness § Believe it or not……. § Disk supply is tight § Hoya/NSG controls 70+% of glass § Only a few remaining OEM media suppliers § Head supply is tight § OEM supplier base down to two § Technology challenges hurting output § Areal density curve too challenging? § Perpendicular recording is coming § Who has the technology and money

Size Does NOT Matter 10/2/2020 18

Any Challengers to HDD? § NO, but in the next 5 -10 years… § OPTICAL: varying formats, speeds not a threat despite huge market in consumer, PC applications for recording, archiving § FLASH: competitive with 1" HDD in some applications, cost premiums to remain huge – BUT these guys ARE persistent! § OTHERS: MEMS? ? ? § Watch for perpendicular recording (2006? ), heat -assisted magnetic recording, millipede-type technologies § HDDs will not be challenged in capacity, bit cost, but watch for flash changes!

Thank you! johnd@trendfocus. com 10/2/2020 20