By Abhijeet Mukherjee, CRN, February 17, 2012, 1300 hrs
With convergence, there has been exponential growth in digital content which in turn is driving demand for external storage devices including hard drives and portable flash memory products.
“Over the past couple of years, factors like social media, digital convergence, improved broadband connectivity and the launch of 3G services have given an impetus to the consumer storage market. As a result, the external storage market is witnessing strong growth,” says Sumanta Mukherjee, GM, Research and Consulting, Computing and IT Peripherals, CMR India.
By industry estimates, the external storage market in India clocked approximately Rs 1,680 crore and is expected to double by 2016.
Despite the blip in the HDD market due to the shortage created by floods in Thailand, the external HDD market grew by a good 30 percent from 1.4 million units in 2010 to 1.83 million units, and contributed roughly Rs 450 crore.
The portable flash drive (USB drive) market recorded unit sales of 18.7 million during the same period, aggregating to a market size of Rs 470 crore, while the flash card market sold close to 41 million units to rake in Rs 760 crore.
Solid state drives, due to the push from companies like Transcend and Kingston, are gaining traction in certain segments. The recent HDD shortage seems to have provided it some push in the market.
HDD shortage
Over the past three years, the external HDD market has grown at 70 percent CAGR, and had it not been for the Thailand floods it was expected to grow well above 40 percent even in 2011. “The continuing shortage has taken the sheen off the external HDD market. The shortage has led to an increase in prices by 50-60 percent, and this has impacted sales,” says Naresh Popat, MD, Checkmate Computers, a Mumbai-based reseller.
While HDD vendors such as Seagate and WD have resumed their manufacturing in Thailand, they say that supplies will normalize only by Q32012. The price of an external 500 GB drive which rose from Rs 2,400 to Rs 5,000+ has now come down to Rs 3,800. It’s expected to fall further as more supplies come into the market.
Despite the shortage, storage vendors like Seagate, Western Digital and Iomega are bringing out innovative technology products such as media players that work as a unified storage medium for all digital gadgets and can be accessed as a wireless network drive for the digital home. “Most of these drives can also be accessed over the Internet from anywhere as a cloud storage. We have added apps that can be downloaded on your smartphones which can then be used to access any data residing on the home drive,” explains Khalid Wani, Sales Director, Branded Business For India, Middle East and Africa, WD. Seagate’s FreeAgent GoFlex TV HD Media Player, and WD’s TV Live Hub are some of the popular devices; the devices are priced at Rs 7,000- Rs 8,000 for the 1 TB versions.
Both Seagate and WD have seen the demand grow for such home network drives. “The network drives are seeing increased adoption in Indian homes as the proliferation of digital devices continues. A typical home has multiple smartphones, 2-3 PCs and a digital player; a few homes also have smart TVs today. We see increased demand for network drives which can connect wirelessly across all digital devices and serve as a common storage for a digital home,” says Rajesh Khurana, Country Manager, Seagate India and Saarc.
Seagate has also launched a slim HDD specifically for tablets. This is the first battery-powered external hard drive to wirelessly extend the storage capacity of any Wi-Fi-enabled mobile device. Devices are wirelessly connected to the GoFlex Satellite drive by use of the free GoFlex Media app, available now on iTunes on the Apple App Store and Android market place, or a Web browser. The drive is priced at Rs 11,500 for 500 GB.
“With tablet and smartphone shipments increasing, more data is being created and consumed on mobile devices. These devices however can’t be connected directly to the HDD as it requires a lot of power to boot and retrieve data. A battery-driven Wi-Fi storage becomes a perfect companion,” explains Khurana.
SSD market
The SSD market in India is in its nascent stage and is driven mostly by the corporate segment and professionals. Prices of SSDs have dropped in the last couple of years, but they still command a huge premium over HDDs.
A 128 GB SSD was priced at Rs 15,000 a year back and is now available at below Rs 10,000. However, it would still be 15 times overpriced if compared to a similar capacity HDD. While the prices will fall further in 2012, the prices will still be nowhere near the per GB cost of HDD, and will remain beyond the reach of the average consumer,” says Ajay Kogta, India Country Manager, Strontium Technology.
Vendors such as Kingston, Strontium, Transcend, Iomega and SanDisk are focusing on creating awareness among corporate and professional users. “We are doing a lot of events in the corporate sector to create awareness. A lot is being done to publicize the advantages of SSDs over HDDs. We are also distributing the drives free of cost to help corporates test the product,” says Nidhi Sethi, Sales Director, Flash, Kingston India.
An SSD consumes less power, and is light-weight and shock-proof. It’s also silent because it has no moving mechanical parts. Due to these advantages, sectors like airlines, transportation and banking have started using SSDs. “These drives solve many of the challenges of these industries. Airlines, for example, need a storage device that’s shock-proof for their on-board entertainment, and SSDs serve this purpose,” adds Sethi.
The increasing demand for tablets and ultrabooks that use SSDs is also expected to create economies of scale for this technology, thus driving down its prices. Many believe that the shortage of HDDs can also help increase the demand for SSDs.
“Due to the unavailability of HDDs we have been selling SSDs to many corporate and high-end professional users. While they are a lot more expensive compared to an HDD, when you explain the advantages to the professional user he is willing to buy it,” says Jimmy Joseph, CEO, Thomson Computronics, a Kanpur-based sub-distributor.
USB drives
The market for flash drives is expected to grow at 15 percent in 2012. “Today, the entry level has become 8 GB, and in 2012 we expect 16 GB to become the entry level. The price of 8 GB today is less than Rs 400, so going by that logic a 16 GB should cost a similar amount in the coming months,” remarks Manisha Sood, Country Manager, India and Saarc, SanDisk.
With the commoditization of the product category, vendors like Kingston, Strontium, Transcend and SanDisk are trying to segment the market with features specific to certain verticals.
Drives with security features are the most popular. Apart from software, some of the high-end drives come with hardware encryption where microchips within the USB drive carry out automatic encryption. These devices offer additional features such as the ability to automatically overwrite the contents of the drive if the wrong password is entered more than a certain number of times. “The target audience for this is corporate users, legal professionals and CAs who carry confidential data. The prices of these products range from Rs 999 to Rs 25,000 depending on the type of security features and capacity of the drive,” Sethi informs.
Flash cards
The flash card market which recorded 41 million units in 2011 is expected to grow to 50 million units by the end of 2012. With Android smartphones becoming popular and available for as low as Rs 5,000, there’s increasing adoption of micro SD cards to store and share photos, games, music and video clips.
Increasing affordability and the use of digital cameras with high resolutions are driving the market for high-capacity/high-speed flash cards as users look for a fast and secure storage medium to store more still pictures and HD video.
Over the past several months, memory vendors have been segmenting the market by selling faster cards with Class 2, 4 and 6 transfer speeds. “With the market maturing, consumers are willing to pay a premium for faster memory cards. Many smartphone users and professional photographers opt for Class 4 and Class 6 cards which have transfer rates of 4 Mbps and 6 Mbps respectively,” informs Sood.
Different challenges
While for HDDs the present shortage is one of the biggest challenges, for SSDs the challenge still remains its high price. For MicroSD cards the challenge is that the majority of the Indian population uses old mobile phones that do not support the higher-capacity cards.
Gray products have also hit the external storage market. “Around 40 percent of the products, especially flash cards and drives, are smuggled from China,” says Mukherjee of CMR India.
The volatility in dollar value is another challenge for the industry because most of the products are imported. “The recent fluctuations in the value of the Rupee have also impacted the storage industry, but we expect the situation to normalize in another six months,” adds Kogta.
Despite these challenges, the exponential growth in digital content will continue to fuel the external storage market and provide a good opportunity for the channel. |