Maxtor’s Yogesh Kamat reveals that the company has launched IDE drives that support the UDMA 133 standard

The ubiquitous floppy might be in its death throes, but the market thrived on a host of optical disk drives. In addition, hard disk drives witnessed remarkable evolution in terms of capacity and technology bringing cheer to an otherwise dull market. Rajneesh De & Chitra Padmanabhan trace the dynamics behind this gold rush

With the advent of SCSI-IDE interfaces and controllers, more and more vendors are looking at supplying high capacity IDE drives with their solutions as a cost effective method of storage

Most vendors feel that the share of CD-ROMs may become minimum in A and B markets, while it could continue to sell in B and C class pockets

The Indian IT exports market may be completely dominated by the software and services segment, but the domestic IT market presents a totally different picture where the hardware sector rules the roost. The hardware contribution to the overall IT revenue during last year was pegged at Rs 13,531 crore, up from Rs 9,692 crore logged in the previous year. A significant portion of this came from storage hardware, both on the enterprise as well as on the consumer front. The principal components that come under the category of personal storage include hard disk drives, and the various avatars of optical disk drives like CD-ROMs, CD-RWs, DVDs and other portable media like zip drives and MO drives.

Hard disk drives

iOmega’s Sanjeev Gupta feels that the market is moving towards high capacity in portable data

The hard disk drive market in India is extremely brand conscious, with competition restricted to a few players like Samsung, Seagate, Maxtor, Quantum, Hitachi and Western Digital. Traditionally, Seagate has dominated this market, but Samsung is now making a determined foray. The market for hard disks in the country ranges from 150,000 to 210,000 units per month, with 1,826,100 units being shipped last year (according to IDC), which incidentally translates into an 18 percent increase in terms of units.

There are three major segments in this market, the MNC PC brands, the local OEMs (like HCL and Zenith) and the assembled PC market. The largest of these segments is the assembled PC market, where Samsung dominates with more than 60 percent of the market share. Seagate leads in the other two segments, though M S Bhalla, country product manager, hard disk drive, Samsung Electronics India Information and Telecommunications (SEIIT), claims that Samsung is gaining an increasing foothold in the local OEM segment by virtue of supplying hard disks to brands like HCL, Zenith and PCS. Even Maxtor is successfully following the OEM strategy, by entering into tie-ups with HCL, Wipro, Zenith, Vintron, PCS and Cerebra. However, Seagate still rules amongst the MNC PC brands.

Though research agencies like IDC released figures of vendor shares, in most cases it is almost impossible to determine the exact market split especially amongst the leaders, Samsung and Seagate. In 2001, Samsung recorded sales of 783,000 units, which it expects to grow to well over a million this year. Despite repeated reminders, Seagate was however, not willing to share any figures with Express Computer. But industry watchers opine that the figure would be close to that of Samsung. Of the other players, Hitachi looks set to consolidate its share, following its acquisition of IBM’s hard disk line of business.

Capacity interface conundrum
The different capacities of hard disks currently available in the Indian market today range from 20 GB, 40 GB, 60 GB, 80 GB and 120 GB in the 5400 rpm speed category. And 40 GB and 80 GB in the 7200 rpm category. Most vendors are gradually attempting to phase out the 20 GB hard disks, as the 40 GB is increasingly being accepted as the entry level. Last year this segment witnessed a substantial southward movement on the price front. While a 20 GB hard disk earlier was available for Rs 4,100, it now makes a Rs 3,600 hole in the consumer’s pocket; a 40 GB disk comes with a price tag of Rs 4,200 down from Rs 5,200 a year earlier.

M S Bhalla claims that Samsung is gaining an increasing foothold in the local OEM segment

This growing trend for higher capacity disks is also reflected in the different segments the vendors are currently targeting. According to Bhalla, the current standard in India is for the 40 GB per platter hard disk. Different vendors including Samsung are also coming up with 60 GB per platter products, which offer up to 120 GB capacity with two platters. With this product fast gaining popularity, even the next platform (80 GB per platter) is expected to be launched by all the major vendors by the end of this year. In terms of interfaces, USB connectivity is currently limited to external hard disk drives, which anyway have a very small market. SCSI drives, on the other hand, continue to be popular in the enterprise storage segment.

In the desktop PC market, the UDMA 100 standard rules the roost. And though Yogesh Kamat, sales manager, India Subcontinent, Maxtor, reveals that they have launched IDE drives that support the UDMA 133 standard, it is still to be seen whether these disks will attain the same popularity. The trend in IDE drives seems to be moving towards serial ATA (SATA) interface which would support up to 400 Mbps which is four times the current data transfer rate. Both Bhalla and Kamat are betting on the SATA interface becoming popular by early 2003. Most hard disks today are also adopting the Quiet Drive Technology (QDT) that provides PC users with the lowest possible noise levels and best overall sound quality from their drives. Because the hard disk drive and cooling fan are mechanical devices, they typically are the loudest component in any system and have the greatest influence on the system’s noise output. Samsung hard drives come with its patented “noise guard” and “silent seek” technologies, that make it one of the most silent hard disk drives in the world.

Kamat also elaborates on the technical difference of the SATA interface from the parallel ATA interface used today. “Serial ATA hard drives are designed to increase the available bandwidth from the disk drive to the computer system. At 150 Mbps, Serial ATA improves hard drive performance to keep pace with increasing data intensive environments such as audio/video, consumer electronics and entry-level servers.” System design and manufacturing complications that existed with the bulky cable structure of parallel ATA are also eliminated with the new compact serial cables and point-to-point interface of serial ATA. With the serial ATA’s improved cable and connectivity to a hard drive, there is more room in the chassis for better system airflow and design flexibility. Direct connections from each drive to the host allow dedicated bandwidth for each device and enable hot-plug connection capability. Serial ATA is also fully backward compatible with existing parallel ATA software and drivers.

Varying hard disk breeds

LG’s Manikandan feels that CD-RWs would soon find application in all segments

Does the hard disk technology vary for desktops, notebooks and servers? Currently people are using IDE drives for their desktops and notebooks and SCSI drives for the servers. But as computers are becoming more network based there has been an increase in the demand for SCSI drives. Another factor that is determining the increase in demand for the SCSI, is that multiple drives can be connected together, a feature required for the servers. Usually, SCSI drives feature prominently in network servers while IDE drives work for the desktop PC segment. However, the entry level servers, which are normally used in the SOHO and/or SME segments, now use the 7,200 rpm IDE drives on an increasing basis, which are lower in cost compared to the SCSI drives and provide better performance over the 5,400 rpm IDE drives. Adds Bhalla, “Desktops generally use the 3.5” form factor IDE hard drives while notebooks PCs use the 2.5” (slim) form factor IDE drives.”

Emerging Trends
There is a great demand in the enterprise segment and cost is going to be a major deciding factor in determining the disk’s growth rate. With the advent of SCSI-IDE interfaces and controllers, more and more vendors are looking at supplying high capacity IDE drives with their solutions as a cost-effective method of storage, which allows them to deliver the final solution at a substantially lower cost to their customers. A recent example is a supplier who had to supply 4 TB of storage to a university and preferred to use Samsung 120 GB IDE hard drives, at a fraction of the cost of similar capacity in SCSI drives.

The SOHO segment however would remain one of the key growth drivers in the Indian market. This segment looks at the “best value” products rather than the “lowest cost” products. SOHO buyers have been the largest purchasers for higher capacity drives (because of lower cost per GB) and 7,200 rpm drives (better price-performance equation) and this scenario does not look like changing soon.

Samsung hard disk drives are being distributed in India by its four national distributors, Tech Pacific, Redington, Savex and Neoteric. Says Bhalla, “Our strategy is to enable our partners to concentrate on what they do best, which is to sell. We support them in all other respects like after sales service (Samsung remains the only hard disk drive to be serviced directly by the company and not by the channel) and giving tax/octroi paid deliveries.” On the other hand, Maxtor works closely with three distributors, Cyberstar, eSys and Ingram Micro.

Optical disk drives
Optical disk drives (ODD) continue to remain a lucrative segment within the hardware pie embellished by the ubiquitous CD-ROM drives, the current favourites CD-RWs, and the new kid on the block, the DVD drives. The total size of the ODD market in the country is estimated to be 75-80 percent of the installed base of PCs in the country. Of this, nearly 70-80 percent would be CD-ROMs, with about 20-25 percent CD-RWs and just about 5 percent with DVD ROMs.

The CD-ROM drive market in India is pegged at approximately 15 lakh units, while the CD-RW market has sold around three lakh units. DVD drives on the other hand, which have been claimed as the next big thing, have not been growing at the same phenomenal rate. After HP stopped manufacturing CD-RWs, and switched over to DVD drives, many expected to see an increase in DVD sales. However, the market expectations have been sadly belied, probably due to DVDs being very costly, beginning from Rs 15,000 and upwards. With more low-cost CD-RWs coming in, consumers mainly home users have yet to get used to the idea of switching over to DVD drives.

In the overall ODD market, LG enjoys the lion’s share at 45 percent, followed closely by its Korean rival Samsung, at 35-40 percent. The Japanese giant Sony whose products are distributed in India by Rashi Peripherals enjoys 8-10 percent market share, with the rest distributed amongst a number of vendors, with the Taiwanese brand BenQ leading among them. Within CD-ROM drives, Samsung is the undisputed leader with nearly 65 percent market share. When it comes to CD-RWs, LG leads the rest with a comfortable margin. For DVDs, the market size was approximately 30,000 units with Samsung garnering almost 70 percent of it.

Trends for each component
In CD-ROM drives, the market is steady at 52x speed, where LG dominates, according to R Manikandan, deputy general manager, IT marketing, LG Electronics India. Tashi Gelek, managing director, BenQ India reveals that though the market seems to have stabilised around the 52x speeds, BenQ is also providing 56x speed in CD-ROM drives which is likely to give it the first-mover advantage. He feels that speed and stability are of prime importance when it comes to a CD-ROM drive. Speed is in terms of the loading, reading rates and rewriting modes, while stability is on the overall operations that are executed. What the customer is looking for is a gadget that is high on technology, but simple to use.

Adds Amit Gupta, product manager, Rashi Peripherals, “On the CD-RW front, after 12x, 24x was the highest selling speed, which remained for quiet sometime in the market. This was followed by 32x, which was soon replaced by 40x speed.” Aseem Kumar, business manager, ODD, SEIIT, reveals that Samsung has introduced three models of Combo writers of 8x, 16x and 32x speeds. CD-RWs as a product are going through a growth phase. The acceptance for the same has increased manifold amongst the end consumers and they are beginning to realise the immense benefits that can be derived through this, when compared to CD-ROMs. Customers have realised that a CD-RW is a powerful device that is packed with more features and utility as compared to a CD-ROM. While in the SOHO segment, CD-RWs are used for storage and for entertainment purposes, the product has a good utility value in the SME space too. Most vendors feel that the share of CD-ROMs may become minimum in A and B markets, while it could continue to sell in B and C class pockets. Price will be the biggest determining factor as the gap narrows down with CD-ROM drive, CD-RWs could become the norm. Some of the new technologies involved with CD-RWs include Buffer Under Run Proof, Mt. Rainer Technology Support, ZCLV and PCLV.

According to Manikandan, CD-RWs would soon find application in all segments. Currently, home and SOHO usage are driving the volumes, with the SME segment all set to join the force. Corporates and large companies will continue to use other storage devices largely for reasons like speed, restoration, data security and reliability. Even if CD-RWs find entry in large corporates due to the fact that the PCs are networked, many users will share a given drive. Hence, the CD-RW volumes will continue to come from the home, SOHO and partly from SME buyers.

On the DVD front, the DVD-drives are all of 16x speed for all vendors and it will not go beyond this currently.

Kumar feels that the speeds on DVD drives and writers will stay stable till the year end. He also feels that due to non-availability of DVD media titles, the DVD-ROM drives will not take-off this year. Also, the media cost of DVD-ROM/R/RW is very high making it prohibitive for most users and enabling piracy in DVD to catch on. Adds Gupta, “Target customers for DVDs are home users, basically looking for multimedia-based utilities. Also, the higher storage capacity of the DVD media would make it a more attractive purchase for them once the prices come down.”

Vendors’ distribution strategy
Kumar admits that channels have been the greatest strength of Samsung in India. Samsung today has the largest network of billing locations available in the country. “Our channel policy of product-based focused channel partners helped us make “product ambassadors”. Even LG is not lying much behind. It has successfully implemented the regional distribution model. Now, reveals Manikandan, this model is streamlined and is going seamlessly, the channel is happy and well contented with LG’s product offering, quality and support. Rashi along with Sony had identified certain channel partners and certified them as SAP (Sony Authorised Partners). This certification was done based on certain parameters like loyalty, value addition and after sales service to customers.

iOmega zips into the ODD space
Within the ODD segment, even Zip drives, Jaz drives and MO drives are gradually becoming a force to reckon with, iOmega being the leading name in this sector. Iomega offers Zip drives in 100 MB and 250 MB capacity. Both drives are available with internal Atapi interface, USB connectivity and parallel port connectivity options. Both these drives are available in the read and write mode. iOmega sells its products through three national level distributors, Tech Pacific, Ingram Micro and Neoteric. Sanjeev Gupta, senior business development manager, iOmega, explains the rationale behind the growing demand for Zip drives. “The Indian market is fast growing to significant levels largely due to the requirement of higher storage in our day-to-day life. The ‘black-and-white’ days of the floppy are history, today we have colourful multimedia presentations, loads of MP3 music, downloads of Internet files, instant capture of pictures of work and play all adding to the fast growth of Zip drives business,” he says.

He feels that the market is moving towards high capacity in portable data storage due to numerous factors. Some of these include increasingly larger work files, digital-data enabled consumer devices and the Internet, where in a short span of time, it has seen widespread application in areas like communications, entertainment, e-commerce and customer service. Moreover, with the wider adoption of high-speed broadband access, experts are expecting to see a further rise in the requirement of portable storage devices like Zip and MO drives. There is a rapid increase in the use of mobile devices such as laptops and PDAs due to flexi-timing and also an increase in commuting time, which has spurted the demand for Zip drives. The flood of digital information in the form of data files, presentations, charts, databases, programs, multimedia applications is also playing a key role and the deluge shows no sign of slowing down. Lastly, the virus problem facing corporations is getting worse. The likelihood of a company experiencing a computer virus has approximately doubled for each of the past five years, aided no doubt by the advent of new malicious threats like macro viruses, Internet worms and scripting viruses and this automatically leads to a demand in these devices for data transfer.