Storage Takes the Stage

More freedom demands more space.

That truism has played out so many times that it's become a cliche -- from the Pilgrims in New England to the homesteaders in the Old West to commitment-phobes in relationships today. But it bears repeating at least one more time, because it's playing out yet again, thanks to digital media.

Music and video lovers, long chained to restrictive schedules of commercial-ridden broadcast media, are increasingly throwing off their shackles and downloading albums, movies and TV shows. Apple's (AAPL Quote - Cramer on AAPL - Stock Picks) success in offering programs such as Lost on the iPod, and TiVo's (TIVO Quote - Cramer on TIVO - Stock Picks) plans to allow transfers of shows it records to portable devices are only the latest steps toward a world in which consumers get their media where they want it, when they want it.

But Apple, Creative Technology , Matsushita's(MC Quote - Cramer on MC - Stock Picks) Panasonic and other makers of portable media players stand at the very visible tip of the iceberg. Having the freedom to download your favorite content demands more space -- storage space.

And Wall Street is only starting to wake up to what this is going to mean for the sleepy storage industry, returning some shine to long unglamorous stocks such as Western Digital , Seagate Technology and Maxtor .

For every iPod or portable media player purchased -- and some 30 million of them have moved off the shelves so far, according to Apple -- consumers need a desktop or laptop to store another copy of the song, video clip or digital photo that iTunes will upload to the music player. Those who have either the foresight or the unforgettable nightmare of a crashed hard drive will have a second hard drive for backup copies of their beloved media.

So, in addition to offering loads of business to companies such as Samsung, Apple has been a boon to disk-drive makers of PCs as well. PC shipments increased more than 17% in the third quarter, according to IDC, as users took advantage of low prices to replace aging PCs, many of which have small hard drives. This may represent the first cycle of upgraded PCs that is driven less by new operating system software and more by the need for larger hard drives.

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